Rand Rr2641

The Evolving Israel-
China Relationship
Shira Efron, Howard J. Shatz, Arthur Chan, Emily Haskel,
Lyle J. Morris, Andrew Scobell
C O R P O R AT I O N
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Preface
Since the early 2000s, relations between China and Israel have
expanded rapidly in numerous areas, including diplomacy, trade,
investment, construction, educational partnerships, scientific coopera-
tion, and tourism. China’s prime interests in Israel are advanced tech-
nology and its location as part of the Belt and Road Initiative. Israel
seeks to expand its diplomatic, economic, and strategic ties with the
world’s fastest growing major economy and diversify its export markets
and investments from the United States and Europe.
Although evolving relations with China present Israel with impor-
tant opportunities, they also pose a variety of challenges. This report
discusses the growing relationship and the challenges it poses for Israel
and for Israel’s most important ally, the United States. It concludes
with two recommendations for Israel and one for the United States.
Israel would benefit by (1) gaining a better understanding of the oppor-
tunities and challenges deeper ties with China could bring, including
developing better knowledge of China; and (2) using the experience
of other countries to develop policies toward China that account for
these challenges and opportunities. The United States, in turn, would
benefit by working more closely with Israel to deconflict, shape, and
advance a mutually agreed upon China-related agenda and by helping
Israel build its knowledge base and understanding of China.
iii
iv The Evolving Israel-China Relationship
This report examines the nature of Israel-China relations with

a greater emphasis on the Israeli perspective and implications for the
United States. It should be of interest to policymakers, analysts, and
academic researchers studying Israel, U.S.-Israel relations, and China
and China’s international relations.
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not necessarily reflect the policy preferences or interests of its clients,
donors, or supporters.
This venture was made possible through several funding sources.
One was a generous gift from the Cyrus Chung Ying Tang Foundation.
Through this gift, the RAND Center for Asia Pacific Policy (CAPP)
established the Tang Institute for U.S.-China Relations in 2007, within
which this research was conducted.
Funding for this venture was also provided by the contributions
of the CAPP Advisory Board and the RAND Center for Middle East
Public Policy (CMEPP) Advisory Board, and the research was con-
ducted within CAPP and CMEPP, both part of International Pro-
grams at the RAND Corporation.
Contents
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii
Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv
CHAPTER ONE
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Challenges Associated with Israeli-Chinese Ties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Data and Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Plan for This Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CHAPTER TWO
History of Israel-China Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Early Years: The Path to Normalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Defense Technology Transfers Were the Bedrock of Ties Until 2005.. . . . . . 15
The Shift from Defense Cooperation to Economic Cooperation. . . . . . . . . . . 20
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
CHAPTER THREE
Chinese Perceptions of and Interests in Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
v
vi The Evolving Israel-China Relationship
A Model for High-Tech Innovation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Defense, Security, and Counterterrorism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
The Geostrategic Importance of the Middle East.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The Belt and Road Initiative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mixed Attitudes Toward Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CHAPTER FOUR
Measuring Israel-China Relations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Diplomatic Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Defense Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Economic Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Education and Cultural Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
CHAPTER FIVE
Chinese Investment and Construction in Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Investment and Construction Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Chinese Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Israeli Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
CHAPTER SIX
Policy Implications of Growing Israeli-Chinese Ties. . . . . . . . . . . . . . . . . . . . 123
Policy Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Implications of Israel-China Relations for the United States. . . . . . . . . . . . . . . 142
Concluding Thoughts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
APPENDIXES
A. Data Collection and Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
B. Differences in Trade Data by Source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Figures
4.1. High-Level Chinese Visits Under Each Chinese Leader,

1992–2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.2. High-Level Visits to China Under Each Chinese Leader,
1992–2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.3. Top-Level Defense Visits to the Middle East Under Each
Chinese Leader, 1992–2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.4. Top-Level Defense Visits to China Under Each Chinese
Leader, 1992–2018.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.5. Arms Exports from China, 1992–2015. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.6. Arms Exports from Israel to Various Countries in Asia,
1992–2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.7. China Exports to Israel, 1992–2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.8. China Imports from Israel, 1992–2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.9. Chinese and Israeli Patents, 1992–2015.. . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.10. Chinese Tourists to Israel, 2014–2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
5.1. Chinese Investment in Israel by Sector, 2007–2018. . . . . . . . . . . . . . 85
5.2. Aerial Image of the Haifa Port Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.3. Aerial Image of the Ashdod Port Area. . . . . . . . . . . . . . . . . . . . . . . . . . . 110
B.1. Hong Kong Exports to Israel, 1991–2016. . . . . . . . . . . . . . . . . . . . . . . 156
B.2. Hong Kong Imports from Israel, 1991–2016. . . . . . . . . . . . . . . . . . . . 157
vii
Tables
3.1. Chinese Public Opinion of Israel’s Influence, 2006–2017. . . . . . 45

4.1. Chinese Support for UN Security Council Resolutions on
Israel, 1992–2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.1. Chinese Companies That Have Invested or Built
Infrastructure in Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.2. Israeli Companies That Received Chinese Investment.. . . . . . . . 114
5.3. Israeli Venture Capital Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
6.1. Attributes for Consideration in a Cost-Benefit Analysis of
Israel’s Ties with China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
ix
Summary
Israel and the People’s Republic of China (PRC) have expanded and
transformed the nature of their relationship in recent years. Both have
much to gain. China seeks Israeli advanced technology and would
like to learn from Israel’s success in innovation, among other interests.
Israel, on the other hand, can benefit from diversifying its relationships
and expanding its diplomatic and economic ties with the world’s fastest
growing major economy.
But there are several challenges to the relationship. For example,
Israel relies on the United States for security, economic ties, and geopo-
litical assistance, while the China-U.S. relationship has grown increas-
ingly tense. In addition to long-running U.S. security concerns regard-
ing China, the United States is particularly concerned about transfers
of U.S. technology and about any technologies that give China a mili-
tary edge. Additionally, Israel has relied on its technology sector for
economic growth, but China has a record of pilfering technology and
not respecting intellectual property.
This research discusses Israeli-Chinese relations. The authors
draw on various data sources; academic literature; original reporting
in Hebrew, Chinese, and English; and conversations with dozens of
subject-matter experts to elucidate the nature of Israeli-Chinese ties.
We discuss the opportunities and various challenges of the relationship
and propose recommendations for Israeli and U.S. policymakers.
xi
xii The Evolving Israel-China Relationship
The Development of Israel-China Ties
Israel-China relations began in 1979 when businessman Saul Eisenberg

helped arrange a secret meeting between the two sides that resulted
in the first of many deals to transfer defense technology from Israel
to China. Over the next two decades, military technology transfers
between Israel and China totaled between $1 billion and $2 billion in
more than 60 transactions. Ties were formalized in 1992.
The defense relationship experienced two major setbacks in the
late 1990s and early 2000s, both involving U.S. technology. In the
first, Israel yielded to U.S. pressure and canceled a deal to install the
PHALCON advanced airborne radar system on surveillance planes for
the People’s Liberation Army Air Force. The United States contended
that the system contained restricted U.S.-origin technology that could
not be transferred, and was concerned about China’s growing military
strength. The second setback took place in 2005 and involved upgrades
to HARPY unmanned aerial vehicles. This disagreement resulted in
the severance of defense relations between Israel and China as well as
major changes in the structure of Israel’s export control regime.
Despite these disagreements, the United States and Israel man-
aged to keep trouble stemming from Israel’s defense relationship with
China from affecting other dimensions of the U.S.-Israel relationship.
But it was clear that the nature of the Israel-China relationship would
need to change. Accordingly, and largely because of the evolution of
both economies and the policy priorities of each government, the rela-
tionship developed in several other dimensions, including trade, invest-
ment, and educational exchange.
There are pragmatic reasons for the PRC’s engagement with Israel.
The Chinese view Israel as a country that can help them spur inno-
vation and research and development. This is especially important as
China attempts to shift from an investment- and export-led economy
to an innovation- and consumption-led economy. They look to Israeli
policies and technology in defense, security, and counterterrorism as a
Summary xiii
means of addressing China’s needs in military and domestic security

capabilities. Israel’s achievements in agricultural technology, medical
technology, water technology, and other fields of technology are also
relevant to China’s domestic agenda. There is a geopolitical dimension
as well: China views Israel as a partner in China’s overall Middle East
policy and has sought to maintain good relations with all countries in
the region. Within this geostrategic context might lie an effort on the
part of China to make inroads with a key U.S. ally in the region with
the intent to undermine global U.S. alliance and partner networks.
There is also a geo-economic reason: Israel can serve as a useful node in
the Belt and Road Initiative, China’s grand vision for linking Eurasia,
Africa, and Europe by land and sea.
For Israel, there are also many potential benefits. Israel has been
working to diversify its economic relations from its traditional trade
and investment partners—the United States and Europe—because of
economic and diplomatic considerations. The European market has
been stagnating and Europe is a difficult diplomatic front for Israel,
with substantial pressure coming from the pro-Palestinian Boycott,
Divestment, and Sanctions movement. Although the United States
does not pose the same diplomatic challenges for Israel, a substantial
expansion of Israeli-Chinese bilateral ties took off in 2013–2014, when
relations between the United States and Israel were less cordial than
those to which Israel was accustomed. In addition, China can serve as
a source of investment for Israel, as it does for other countries.
The Nature of Israel-China Ties
These mutual interests have resulted in a growing relationship across

several dimensions, some of which are stronger than others. The stron-
gest areas have been economic. In the realm of trade, Chinese goods
exports to Israel, as reported by China, hit the $8 billion range in 2016,
up from only $12.8 million in 1992. Chinese goods imports from Israel
xiv The Evolving Israel-China Relationship
have grown from only $38.7 million in 1992 to more than $3 billion

in 2016. Services trade also is likely active, although data are sparser
than those for goods trade. One marker of services trade is patenting
because the use of intellectual property is a service. In 2015, Israeli-
origin patent applications in China hit 700, up from none in 1992,
and China granted 365 patents to Israeli-origin innovators that year.
Chinese patenting in Israel, in contrast, remains low, with fewer than
50 applications and grants.
As with trade, investment and Chinese construction activity in
Israel have been growing rapidly since the early 2000s. Official bilat-
eral data on investments and construction are sparse, so we used alter-
nate sources to identify such transactions. Between 2007 and 2017
there were at least 69 investments and construction projects involv-
ing Chinese entities in Israel and involving 34 Chinese companies.
Reported investment totaled $12.9 billion, while contracts for the con-
struction and operation of infrastructure projects totaled more than
$4 billion. The agriculture and technology sectors were the biggest tar-
gets of Chinese investment, with reported investment at more than
$5 billion each. Construction projects focused on transportation infra-
structure, including ports, tunnels, and railway lines.
Academic ties are also growing. Although the numbers of stu-
dent exchanges are small, as of April 2016, Israel had four campuses or
institutions in China, and educational exchanges were active on both
the governmental and unofficial levels. For example, in January 2015,
Israeli Foreign Minister Avigdor Lieberman and Chinese Vice Premier
Liu Yandong signed the “China-Israel Innovation Cooperation Three-
Year Action Plan,” which proposed the founding of the China-Israel
7+7 Research-Based University Alliance to promote research and aca-
demic cooperation between research universities in Israel and China.
This effort included the establishment of the $300 million XIN Center,
a joint research center for Tel Aviv University and Beijing’s Tsinghua
University, which was designed to concentrate on cooperation in the
Summary xv
area of nanotechnology; a joint laboratory building for the University

of Haifa and East China Normal University on the campus of the
latter, specializing in ecology, big data, biomedicine, and neurobiol-
ogy; and a joint center for entrepreneurship and innovation for Ben-
Gurion University of the Negev and Jilin University. Likewise, there
were at least ten exchanges between Israeli and Chinese university lead-
ers between May 2016 and June 2017.
Chinese tourism to Israel also is growing rapidly. According
to Israel’s Central Bureau of Statistics, the number of tourists from
China, including day visitors, was 32,400 in 2014. By the end of 2017,
this number had risen to 123,900, including day visitors, or an increase
of almost 400 percent in just three years’ time. As of late 2018, with
the rise of business and tourism travel, Israel had direct flights to four
Chinese cities, with a route to a fifth city planned.
However, there are dimensions of the relationship that are not
as strong. Political relations as measured by senior-leader visits have
stayed relatively constant from 1992 to 2017, whereas, by the same
measure, China’s relations with Israel’s main Middle East adversary—
Iran—have strengthened somewhat. Likewise, the defense relation-
ship has stayed cool. Indeed, despite growing Israel-China ties, China
has been developing defense relationships with Iran on several dimen-
sions beyond arms sales, and Israel has a growing arms-sales relation-
ship with India, a rival to China in the Indo-Pacific region. Although
China has mitigated its public criticism of Israel, China regularly votes
against Israel in multilateral forums, and Israeli officials say behind
closed doors that China would never support Israel’s position in the
United Nations.
Concerns Raised by the Relationship
As long as the defense relationship remains limited, the main concerns

about the Israel-China relationship involve investment, related tech-
xvi The Evolving Israel-China Relationship
nology and intellectual property issues, and construction projects. This

is not only true for Israel and its security and economic interests, but
also for the United States, which is primarily concerned with the trans-
fer of U.S. defense-related technology to China and other technologies
and capabilities that could strengthen China’s military edge.
One concern is the nature of the ties that Chinese companies
investing or building major infrastructure projects in Israel have with
the Chinese government, armed forces, or military entities. Any sub-
stantially sized company originating in China likely has links, either
formal or informal, to the government and is expected to cooperate
with its security and intelligence apparatus. Ties to military intelli-
gence or to Chinese operations in the South China Sea would be par-
ticularly concerning to the United States. Cyber risks and the potential
for the transfer of sensitive technologies are the primary issues for mili-
tary and government connections of companies engaging in invest-
ment. Such risks from the U.S. point of view also extend to collabo-
ration that enhances Chinese military technologies or capabilities. In
addition, commercial risk is present with technology transfers, raising
the need for Israel to safeguard its own technological edge. Ties to
objectionable Chinese military activity are the main concern related
to construction. Surveillance could be a concern for some investments,
especially in the telecommunications sector, and for contracts to oper-
ate such major infrastructure as rail and ports.
Several of the Chinese technology companies investing in Israel
have received attention related to security vulnerabilities in their
products or are known to participate in Chinese censorship efforts.
Whether these security vulnerabilities are simply the result of slop-
piness, are included as standard practice for such technology compa-
nies, or are intentionally included to enable government surveillance
is unknown. Chinese internet companies are required to comply with
censorship directives and must turn over user data to the government
upon request if the data are stored on Chinese servers. Such require-
Summary xvii
ments give rise to potential political concerns over these companies’

investments in Israel.
Infrastructure investments present a separate set of concerns. For
example, a state-owned Chinese company won a 25-year contract to
operate a new container terminal in the port in Haifa, beginning in
2021. Although this might be economically beneficial for Israel, it is
also next to the strategically important government-owned naval port.
Haifa is a frequent port of call for the U.S. Sixth Fleet and serves as the
base for Israel’s submarines, making some experts question the trade-
off between economic value and security risks raised by potential Chi-
nese surveillance of the naval port. In September 2018, Rear Admiral
(Ret.) Shaul Horev, the director of the University of Haifa’s Research
Center for Maritime Policy and Strategy and former Deputy Chief of
Naval Operations, noted that the Israeli Navy was putting its relation-
ship with the Sixth Fleet in jeopardy by letting a Chinese company
operate the port.
Former U.S. officials have echoed these concerns. According to
a summary of a conference hosted by Horev, Admiral (Ret.) Gary
Roughead, former chief of U.S. Naval Operations, said that the Chi-
nese port operators could monitor U.S. ship movements and mainte-
nance activity and might have access to information systems, increas-
ing the likelihood of threats to U.S. information and cybersecurity.
Former U.S. ambassador to Israel Dan Shapiro told the Times of Israel
that having a Chinese company operating the port poses risks to U.S.
Navy operations.
At Israel’s other Mediterranean port and naval base, Ashdod,
another state-owned Chinese company is developing a new port that
will be near Israel’s national electricity company and refineries. Such
proximity could lead to intelligence-gathering, and even to sharing
that intelligence with Israel’s adversaries.
There are additional fears that high levels of both Chinese invest-
ment and construction could provide political or social leverage over
xviii The Evolving Israel-China Relationship
Israel, as demonstrated in 2013 when the Chinese government condi-

tioned Prime Minister Benjamin Netanyahu’s visit on Israel ending a
federal court trial in New York against the state-owned Bank of China.
In that case, the Bank of China was accused of laundering Iranian
money for terror activity by Hamas and Palestinian Islamic Jihad. The
case ended without Israel’s participation.
Implications and Policy Recommendations
Despite rapidly evolving relations with China, Israeli understand-

ing of the country and its foreign and economic policies is limited.
Israeli security and diplomacy experts have traditionally focused on the
Middle East, Israel’s immediate environment, while business experts
mostly have been geared toward the United States and Europe. How-
ever, there are several steps that both Israel and the United States can
take to ensure that Israel can continue to develop its relationship with
China while safeguarding its vital interests.
Israel can strengthen its policy approach in two broad areas:
(1) gaining better understanding of what opportunities and challenges
deeper ties with China could bring and of how to shape those oppor-
tunities and challenges; and (2) using the experience of other countries
to develop policies vis-à-vis the PRC that account for these challenges
and opportunities. The United States, in turn, can work with Israel
to deconflict, shape, and advance a mutually agreed-upon agenda on
China and help Israel build its knowledge base and understanding of
the PRC.
In the area of shaping and understanding opportunities and
challenges, Israel would benefit from instituting a formal government
interagency coordination mechanism to manage policy toward China,
which could be run out of the Prime Minister’s Office. Different min-
istries treat China differently (for example, in their receptiveness to
Chinese investment) and sometimes do not have a say in important
Summary xix
issues. A coordination mechanism also would help the government

assess the costs and benefits of specific Chinese opportunities. Finally,
Israel will need to build expertise on China through specialists who
speak the language and understand trends in Chinese society, politics,
foreign policy, economics, military development, and strategic goals.
Israel should ensure that these specialists have access to policy circles
and government offices. As a start, Israel could draw on Israeli defense
experts who were active during the era of deep defense collaboration
between the countries, contemporary China experts in academia, and
private-sector actors who engage with Chinese counterparts regularly
and who, in some cases, have significant knowledge of Chinese politics
and foreign policy.
Learning the lessons of other countries’ experiences with China
could help in developing a more formal process to screen foreign invest-
ments, as least for security implications; considering the regulation of
investments in major infrastructure projects; and increasing the moni-
toring of companies with poor track records in safeguarding technol-
ogy or involvement in espionage or cyber breaches. There are numer-
ous models for screening, from the U.S. model with a focus on national
security, to the Australian model of review for national interest and the
Canadian model of review for net benefit. Israel would not be alone in
considering the development of such a screening mechanism: Major
European countries, faced with rising technology investment from
China, also are moving toward greater screening activities.
As of early 2019, leading security experts in Israel have voiced
concerns over deepening Chinese involvement in Israel’s infrastruc-
ture and technology sector, including Nadav Argaman, the head of
Shin Bet, Israel’s internal security service, who called for instituting
a mechanism for screening foreign investments. Reportedly, mostly
in response to fears over U.S. pressure, the Israeli National Economic
Council and the National Security Council have been working on a
plan to screen foreign investments. A policy shift seems in the making
xx The Evolving Israel-China Relationship
as Israel is reportedly planning to bar Chinese and Turkish companies

from competing in a tender process for the establishment of a new
international airport because of Chinese espionage concerns and diplo-
matic tensions with Turkey. Although China was not targeted specifi-
cally, the tender was limited to companies from member countries of
the North Atlantic Treaty Organization. In March 2019, press reported
that the Israeli government intends to announce the establishment of
a committee to screen foreign investments. However, following protest
by different government ministries, the screening process may only be
voluntary. Either way, such a committee has not yet been established.
Given the close partnership between the United States and Israel,
the United States might be willing and able to help Israel to manage
its growing relations with China. An enhanced U.S.-Israel dialogue
on China could forestall future problems, especially those related to
transfer of technologies that are dual use (i.e., of value to both the civil-
ian economy and military capabilities). Advice on developing China
expertise, as the United States did starting in the 1970s, also could be
of value.
Moving the Israel-China Relationship Forward
Although Israel might need to take a more reserved approach toward

Chinese investment, it should ensure that doing so does not damage its
relations with China. According to reports from the Israeli TV Chan-
nel 13, Chinese officials, including those from the Chinese Foreign
Ministry, have been seeking clarification from Israel regarding state-
ments cautioning against warming ties with China.
Israel should first and foremost not jeopardize its special rela-
tions with the United States, but it also should ensure that it does not
damage its important interests with China. Both countries have much
to gain, and the United States is sympathetic to Israel seeking economic
gains from China—most U.S. allies are doing so, as are most nations
Summary xxi
in the world. Better trade relations, for example, can help diversify
Israel’s exports and provide more resilience to Israel’s economy, espe-
cially because China is expected to grow far more quickly than Israel’s
other major export markets: Europe and the United States. But there
is reason for Israel to be careful about the relationship. The United
States, Israel’s main security partner, views China warily—both as a
trade partner and as a global competitor and potential adversary—and
wants to ensure that China does not gain a military edge. Furthermore,
Israel will need to safeguard its own technology edge. Accordingly, the
smartest steps for Israel would be to build its own capacity to evaluate
costs and benefits and to create a system for coordination within the
government to develop the policies it needs to gain from its relation-
ships with the world’s two leading economic powers.
Acknowledgments
The authors thank our formal peer reviewers, Derek Grossman, senior
defense analyst at the RAND Corporation, and Yoram Evron, associ-
ate professor and Head of Business in the Asia B.A. program at the
University of Haifa, who provided instrumental feedback on this
report. Dr. Evron, in particular, ensured that we sufficiently broadened
the scope of the report and highlighted important nuances. We also
thank the many individuals who helped enhance our understanding
of the complexities of Israeli-Chinese ties, including the Institute for
National Security Studies Israel-China Program team of Assaf Orion,
Galia Lavi, Doron Ella, and others, many of whom chose to remain
anonymous.
We thank the RAND Center for Asia Pacific Policy (CAPP) and
its director, Rafiq Dossani, and associate director, Scott Harold; the
RAND Center for Middle East Public Policy (CMEPP) and its direc-
tor, Dalia Dassa Kaye; and Robin Meili, associate director of RAND
International and director of International Programs, for supporting
this project and contributing to its quality assurance. We also thank
the advisory boards of both CAPP and CMEPP for supporting and
funding this project.
RAND production editor Julienne Ackerman guided the manu-
script through publication, Blair Smith provided expert copy editing,
xxiii
xxiv The Evolving Israel-China Relationship
and Monette Velasco designed the cover. All errors remain the respon-
sibility of the authors.
Abbreviations
AI artificial intelligence
BDS Boycott, Divestment, and Sanctions
BRI Belt and Road Initiative
CCCC China Communications Construction Company
CCP Chinese Communist Party
CCTV China Central Television
CEO chief executive officer
CFIUS Committee on Foreign Investment in the United
States
CHEC China Harbour Engineering Company
CMC Central Military Commission
CSYD China Statistical Yearbook Database
CT counterterrorism
IDF Israel Defense Forces
xxv
xxvi The Evolving Israel-China Relationship
IP intellectual property
IPR intellectual property rights
IRIN Islamic Republic of Iran Navy
IT information technology
JVP Jerusalem Venture Partners
MOD Ministry of Defense
NPC National People’s Congress
NSC U.S. National Security Council
PBSC Politburo Standing Committee
PLA People’s Liberation Army
PLO Palestine Liberation Organization
PRC People’s Republic of China
R&D research and development
SIPRI Stockholm International Peace Research Institute
TIV trend-indicator value
UAV unmanned aerial vehicle
UIS United Nations Educational, Scientific and
Cultural Organization Institute for Statistics
UN United Nations
UN Comtrade United Nations Commodity Trade Statistics
Database
CHAPTER ONE
Introduction
The People’s Republic of China (PRC) and Israel seem like an odd
couple on the global stage. China’s population is 1.4 billion; Israel’s
is 8.4 million. Geographically, Israel can fit 434 times in China’s ter-
ritory. Israel is a small country marking the western border of the
Middle East; China is among the largest countries in the world and sits
at the eastern end of the Eurasian landmass. Despite the vast differ-
ences between them, or perhaps because of those differences, Israel and
China have found common ground. Many in Israel and China have
commented on the complementarity of the two economies. China, as a
developing country, is keen to acquire advanced technology and Israel
is an advanced developer of certain technologies. China also would like
to learn from Israel’s success in innovation. After returning home from
a visit to China in 2013, Israeli Prime Minister Benjamin Netanyahu
claimed that China was interested in “three things: Israeli technology,
Israeli technology, and Israeli technology.”1
Israel, on the other hand, can benefit from expanding its diplo-
matic and economic ties with the world’s fastest growing major econo-
1 Prime Minister’s Office, “PM Netanyahu’s Remarks at the Israeli Presidential Confer-
ence,” Jerusalem, June 20, 2013.
1
2 The Evolving Israel-China Relationship
my.2 Israel has been working to diversify its export markets and for-
eign investments from its traditional partners, the United States and
Europe, a diversification motivated by both economic and diplomatic
considerations. The European market has been stagnating and Europe
presents a difficult diplomatic front for Israel, with substantial pressure
coming from the pro-Palestinian Boycott, Divestment, and Sanctions
(BDS) movement. Although the United States does not pose the same
diplomatic challenges for Israel, the substantial expansion of Israeli-
Chinese bilateral ties took off in 2013–2014, when relations between
Netanyahu’s government and the administration of former President
Barack Obama soured.3
This research describes Israeli-Chinese relations. We provide a
greater emphasis on the Israeli perspective and analyze the benefits,
risks, and riskminimization strategies that Israel should be alert to in
its relations with China, and present implications for the United States.
We also provide a contribution on Chinese views based directly on
Chinese sources. With that foundation, the authors discuss the oppor-
tunities and various challenges in the relationship with a focus on Israel
and propose recommendations for Israeli and U.S. policymakers.
Although informal ties between Israel and China date back to
1979, the two countries have expanded and transformed the nature of
their relationship to include collaboration on science and technology,
Chinese investment in Israeli infrastructure, and academic coopera-
tion. China has become Israel’s third-largest trading partner, after the
United States and the European Union, with more than $11 billion
2 Gregory Noddin Poulin, “Sino-Israeli Economic Ties Blossoming,” The Diplomat,

December 1, 2014; Liu Zhen, “Free Trade and Top Tech: What China Wants from Israel,”
South China Morning Post, March 22, 2017a.
3 Telephone conversation with a former senior official with Israel’s Ministry of Labor, May
2018.
Introduction 3
in bilateral trade in 2017.4 In 2014, Israel imported more goods from

China than it did from the United States. The two nations also are
negotiating a free trade agreement. In 2015, over U.S. objections, Israel
became one of the founding members of the Asian Infrastructure Invest-
ment Bank (AIIB), another Chinese initiative.5 Chinese investment in
Israeli technology companies has flourished and, in 2015, 40 percent
of all venture capital flowing into Israel came from China. The broader
business relationship also has flourished and, in March 2017, during
Netanyahu’s visit to China, the two countries signed ten bilateral and
business agreements at a total value of $25 billion.6
Challenges Associated with Israeli-Chinese Ties
As this report shows, although Israel could benefit from closer relations
with China, these ties might come with strings attached, including
their implications for Israeli-U.S. relations in light of U.S. concerns
about China as a potential adversary.7 There are several challenges for
Israel. The first is trade in defense articles and goods and services that
can be used for civilian or military purposes, or dual-use items.
Chinese interest in Israeli defense technology led to a serious
strain in U.S.-Israel relations and in Israel-China relations in the early
4 Elliott Abrams, “What’s Behind Israel’s Growing Ties with China?” Expert Brief, Coun-
cil on Foreign Relations, June 21, 2018.
5 Dan Steinbock, “American Exceptionalism and the AIIB Debacle,” China-US Focus,
April 13, 2015. Reports indicate that the United States had lobbied allies not to join the
AIIB. See, for example, Geoff Dyer and George Parker, “U.S. Attacks UK’s ‘Constant
Accommodation’ with China,” Financial Times, March 12, 2015.
6 Ariella Berger, “The Rising Strategic Value of Global Technology Assets and Its Impact
on Sino-Israel Relations,” Sino-Israel Global Network & Academic Leadership Perspectives,
June 27, 2017.
7 The White House, National Security Strategy of the United States of America, Washington,
D.C., December 2017.
2000s. In the wake of agreeing to abort such defense connections with

China, Israel recognized that U.S. support limits its freedom of action
in the defense realm vis-à-vis China.8 Recently, however, China has
increased its engagement with the Israeli technology sector, including
on cybersecurity. Some Israeli officials, particularly in the Prime Min-
ister’s Office and the Foreign Ministry, have implicitly suggested that
they might be willing to ease the restrictions on dual-use and defense
technology exports to China that were established in the mid-2000s.9
Notably, the Israeli Ministry of Defense (MOD) has resisted these
calls, reportedly because of the Israeli defense relationship with the
United States.10 Regardless, closer Israel-China ties mean that the issue
of dual-use and defense technology exports will likely resurface. This
development represents an area where Israel’s interests might again
diverge from those of the United States, especially in light of escalat-
ing tensions and the growing trade war between the United States and
China.
A second challenge is incompatibility between some Chinese
and Israeli interests in the Middle East. China’s interests in the region
are motivated primarily by its energy dependence, which demands
good relations with both Saudi Arabia and Iran, the latter of which
has been Israel’s prime enemy since 1979. As a result, China’s politi-
cal and strategic positions, efforts, and objectives in the region, as well
as in such international organizations as the United Nations (UN),
8 Notably, both the deep disagreement and the limits to action stayed largely in the defense
realm (telephone conversation with a former U.S. official with extensive experience in U.S.-
Israel relations, August 2017; and in-person conversation with a former U.S. official with
Middle East–related experience in several branches of government, August 2017).
9 Restrictions were placed after what has become known as the “HARPY incident,” which
involved Israel’s plans to sell spare parts to China for armed drones (HARPY) it had previ-
ously supplied. See Scott Wilson, “Israel Set to End China Arms Deal Under U.S. Pressure,”
Washington Post, June 27, 2005. Regarding calls to ease restrictions, see Ora Coren, “Wash-
ington Obstructing Israeli High-Tech Exports to China,” Haaretz, January 22, 2014.
10 Coren, 2014.
Introduction 5
often do not match Israeli interests. Israeli officials say behind closed
doors that China would never support Israel’s position in the UN.11
Disagreements are not limited to the issue of Iran but also concern
the Israeli-Palestinian conflict, on which China has consistently sup-
ported pro-Palestinian positions. A recent example was China’s nega-
tive response to the U.S. recognition of Jerusalem as Israel’s capital
in 2017. Chinese Foreign Ministry spokesperson Geng Shuang said,
“We support the just cause of the Palestinian people to restore their
legitimate national rights and stand behind Palestine in building an
independent, full sovereignty state along the 1967 borders with East
Jerusalem as its capital.”12
The third challenge to the recent expansion of the Israel-China
relationship is due, in part, to the evolution of Chinese strategic think-
ing about the Middle East and its own role in the international order.13
The Middle East is a key part of China’s Belt and Road Initiative (BRI;
known in China as “One Belt One Road”), and closer ties with Israel
fit into China’s larger regional aspirations while helping to advance
China’s technology sector. Although Chinese President Xi Jinping for-
mally announced the BRI in 2013, the initiative builds on a longer-
term Chinese effort that stretches back to the early 1990s to interna-
tionalize into developing regions, including the Middle East. These
efforts, which even extended into Europe before the BRI announce-
ments, included a large infrastructure development component.14 Since
11 Conversation with a senior official at Israel’s Ministry of Foreign Affairs, Jerusalem,

July 2017.
12
Charlotte Gao, “What’s China’s Stance on Trump’s Jerusalem Decision?” The Diplomat,
December 7, 2017.
13 Yoram Evron, “The Economic Dimension of China-Israel Relations: Political Implica-
tions, Roles, and Limitations,” Israel Affairs, Vol. 3, No. 5, 2017, pp. 828–847.
14
Andrew Scobell et al., At the Dawn of Belt and Road: China in the Developing World, Santa
Monica, Calif.: RAND Corporation, RR-2273-A, 2018; Pamela Luică, “China Expands
Through Rail Infrastructure Investment in Asia and Europe,” Railway Pro, November 17,
the late 2000s, Chinese companies have been involved in building and
operating major infrastructure projects in Israel. These projects include
sites at the country’s only two ports in the Mediterranean Sea, which
are also home to the Israeli Navy;15 parts of Tel Aviv’s light-rail proj-
ect; the excavation of the Carmel Tunnels in Haifa; the excavation of
the tunnels on the Akko-Karmiel train line; and the not-yet-approved
Eilat-Ashdod train construction project, also known as the “Red-Med
railway.”16 Ports, rail, and roads fit in with the general concept of “criti-
cal infrastructure,” which could require special consideration from pol-
icymakers. But although Israel’s MOD prevents companies affiliated
with foreign governments from bidding on tenders, this limitation does
not exist when it comes to tenders issued by the Ministries of Trans-
portation, Energy, and others. This has enabled Chinese companies,
including those with clear ties to the PRC government, to compete
and win tenders for construction and operation of major infrastruc-
ture projects, arguably without sufficient scrutiny.17 China’s repeated
attempts to purchase Israeli assets, such as the Phoenix and Clal insur-
2010; George Ofori, “Chinese Contractors and International Construction: Tentative Ana-
lytical Models and Research Agenda,” The Chinese Research Institute of Construction
Management (CRIOCM) International Symposium on “Advancement of Construction
Management and Real Estate,” Beijing, November 3–5, 2006; Centre for Chinese Studies,
China’s Interest and Activity in Africa’s Construction and Infrastructure Sectors, Stellenbosch,
South Africa: Stellenbosch University, November 2006.
15 As we discuss further in Chapter Five, a Chinese entity is building the new port in
Ashdod and another entity will be operating the new deep-sea Haifa port for 25 years, start-
ing in 2021. See Dubi Ben-Gedalyahu, “China to Be Israel’s Biggest Infrastructure Partner,”
Globes, April 29, 2015.
16 Ben-Gedalyahu, 2015. The Red-Med railway is a BRI-related project meant to connect
the ports of Eilat and Ashdod to ensure reliable access for Chinese shipping from the Red Sea
to the Mediterranean, complementing the Suez Canal, which China uses for shipments to
Europe (Mordechai Chaziza, “The Red-Med Railway: New Opportunities for China, Israel,
and the Middle East,” Ramat Gan, Israel: Begin-Sadat Center for Strategic Studies Perspec-
tives Paper No. 385, December 11, 2016).
17 Authors’ correspondence with an Israeli expert on China, September 2018.
Introduction 7
ance companies, have been blocked by Israeli regulators who fear

transferring the control of Israeli public savings to a foreign company.
However, Chinese construction and operation of major infrastructure
projects, which involve the installation of and access to cameras, radio,
fiber optics, and cellular networks, raise concerns, as we explain in
more detail in Chapter Five.
A fourth challenge associated with the expansion of Israeli-
Chinese ties rests on the security of Israel’s technology and future
prospects for the Israeli economy. Based on the experience of other
countries, China’s policies and practices on matters related to intel-
lectual property rights (IPR) raise red flags in Israel. Furthermore, the
acquisition of Israeli companies and knowledge generated through
academic cooperation might enable China to funnel crucial technolo-
gies and resources from Israel to China, with insufficient returns. This
has become even more prominent with the 2015 introduction of the
“Made in China 2025” document, a ten-year plan, to be followed by
two more plans, to “transform China into a leading manufacturing
power by the year 2049,” the 100th anniversary of the founding of the
PRC.18 Through this process, China could reduce Israel’s ability to
gain returns from its research and development (R&D) and innovation
by making Israeli intellectual property (IP) indigenous to China with-
out payment, impairing Israel’s future growth and prosperity.
Moreover, China’s unchecked investment and access to Israeli
technology exposes the Israeli economy to cyber risks. This concern is
grounded in other countries’ experience. In late 2015, Chinese cyber
espionage targeting U.S. companies was estimated at $360 billion per
year.19 This risk is elevated when it comes to defense technologies.
In 2014, CyberESI reported that Chinese People’s Liberation Army
18 “‘Made in China 2025’ Plan Unveiled,” Xinhua, May 19, 2015.

19 Chris Strohm, “No Sign China Has Stopped Hacking U.S. Companies, Official Says,”
Bloomberg, November 18, 2015.
(PLA) hackers targeted and stole sensitive information about the Iron
Dome missile defense technology. In addition to Iron Dome, the hack-
ers targeted three major defense industry companies, Elisra Group,
Israel Aerospace Industries, and Rafael Advanced Defense Systems,
stealing mostly “intellectual property pertaining to Arrow III missiles,
Unmanned Aerial Vehicles (UAVs), ballistic rockets, and other techni-
cal documents in the same fields of study.”20
A final challenge is that high levels of Chinese investment and
construction in Israel could provide the PRC with political leverage
over Israel. For example, in 2013, China conditioned Netanyahu’s visit
on Israel ending a New York federal court case against the state-owned
Bank of China, which was accused of laundering Iranian money for
terror activity by Hamas and Palestinian Islamic Jihad. Any substan-
tially sized company originating in China likely has links, either formal
or informal, to the government and is expected to cooperate with its
security and intelligence apparatus.
Data and Methods
We used a mixed-methods approach throughout the research effort.

To review the evolution of Chinese-Israeli ties, we drew on academic
literature and original reporting in Hebrew, Chinese, and English.
We explain official and non-official PRC views on Israel using mostly
Chinese sources. To capture the state of political, defense, economic,
and academic cooperation between Israel and the PRC, we relied on a
wide range of sources, including counts of high-level visits, the value
of arms transfers, the value of trade, foreign patenting by Chinese and
Israeli citizens, counts of Confucius Institutes in Israel, the numbers
of Israeli students in China and of Chinese students in Israel, and data
20 Zachary Keck, “Chinese Hackers Target Israel’s Iron Dome,” The Diplomat, August 2,
2014.
Introduction 9
on academic exchanges. To examine Chinese investment and activity

in Israeli technology and infrastructure projects, we used open source
materials that reported on 92 such investments and construction deals
between 2007 and 2018. Finally, we drew on in-depth discussions with
more than a dozen current and former Israeli and U.S. officials and
subject-matter experts to gain a better understanding of the relation-
ship and the points of view of each country. We used these conversa-
tions as a basis for our discussion of the implications of Israeli-Chinese
ties and policy recommendations. We provide more detail on data and
methods in Appendix A.
The Plan for This Report
The remainder of this report proceeds as follows. Chapter Two reviews

the history of Israel-China relations from 1979 to the present. In Chap-
ter Three, we discuss Chinese perceptions of Israel. In Chapter Four,
we use quantitative and qualitative measures to describe trends in
political and diplomatic; defense; economic; and academic, scientific,
and cultural relations between the two countries. We build on this in
Chapter Five with an analysis of Chinese investments and construction
activities in Israel, examining their scope and the potential risks faced
by Israel. Lastly, in Chapter Six we discuss policy implications for Israel
and the United States and offer recommendations for U.S. and Israeli
policymakers so that Israel can fully utilize its expanding relations with
China while minimizing the risks associated with these ties.
We provide more information about data collection and methods
in Appendix A and discuss trade data in Appendix B.
CHAPTER TWO
History of Israel-China Relations
Israel was the first country in the Middle East to recognize the PRC,
which it did in January 1950. After this, the two sides took some ten-
tative steps to establish formal diplomatic relations. However, these
attempts faltered for more than four decades, as the two countries
found themselves on opposing sides of the Cold War and facing pres-
sure by third parties—the United States from Israel’s side and the Arab
countries in the case of China—which hindered the establishment of
formal ties until 1992.1 In the 1980s and 1990s, Israel and the PRC
maintained secret contacts related to the transfer of defense technology
from Israel to China. Two incidents in the late 1990s and early 2000s
related to U.S. opposition to such deals resulted in the suspension of
defense technology transfers and the cooling of ties. Chinese interest in
Israeli non-defense technology has been a driving force in the relation-
ship to the present day, and the two countries have expanded their eco-
nomic ties rapidly despite obstacles in the defense and political realms.
1 Yitzhak Shichor, “Hide and Seek: Sino‐Israeli Relations in Perspective,” Israel Affairs,
Vol. 1, No. 2, 1994.
11
The Early Years: The Path to Normalization
Israel was one of only several nonsocialist countries to first recognize

the PRC and it has consistently supported the One China policy, which
was appreciated by the PRC.2 What was then the Republic of China
was sympathetic to the State of Israel when it was newly established.3
Despite a positive start, Israeli-Chinese ties were subject to the negative
influences of third parties that hindered the establishment of formal
ties for more than 40 years. In 1951, the United States pressured Israel
to freeze ties with China and endorse the U.S. position on the Korean
War at the UN. Meanwhile, relations between the Soviet Union and
Israel underwent a dramatic downturn in 1953, after Jewish doctors in
the Kremlin were accused of attempting to assassinate Joseph Stalin—
a conflict in which China followed the Soviet Union’s lead. Although
an Israeli commercial delegation visited China in 1955, China priori-
tized relations with the Arab states as part of its foreign policy focus
on what was then known as the “Third World” and rejected Israel’s
request to participate in the 1955 Bandung Conference of Asian and
African nations.4 Both Israel and China set aside the development
of bilateral ties from 1956 to the early 1970s, prioritizing relations
with other countries. China continued to advance relations with the
Arab world, and in the 1960s, Chinese attitudes toward Israel turned
quite hostile. Beijing invited the new Palestine Liberation Organiza-
tion (PLO) to open a semidiplomatic mission, its first in a non-Arab
country.5 China advocated for solving the Israeli-Palestinian conflict
2 Chinese leader Deng Xiaoping reportedly cited Israel’s support for the One China policy
as a justification for Chinese diplomatic recognition of Israel (Shichor, 1994, p. 203).
3 Shichor, 1994.
4 Xia Liping [夏莉萍], “Sino-Israeli Relations in the 1950s as Seen from Declassified Files
of the Ministry of Foreign Affairs [从外交部开放档案看20世纪50年代中以接触始末],”
Contemporary China History Studies [当代中国史研究], Vol. 12, No. 3, May 2005, p. 82.
5 Shichor, 1994.
History of Israel-China Relations 13
through armed resistance and provided various Palestinian factions

with military training and weapons.6
Following the reconciliation between Beijing and Washington
and the admission of the PRC to the UN as a permanent member of
the Security Council in the early 1970s, China expanded its foreign
ties. Israel, which supported the PRC’s UN bid, has had an honorary
consul in Hong Kong since 1961 and upgraded it to a full-time con-
sulate in 1972 or 1973 as a pathway for greater communications with
China. Budgetary pressures resulted in the return to honorary repre-
sentation in 1975.7 During the 1970s, although China toned down
its criticism of Israel and several meetings took place between Chi-
nese and Israeli representatives, China avoided establishing diplomatic
ties with Israel, conditioning such a development on settlement of the
Arab-Israeli conflict.8
The death of Chairman Mao Zedong and the rise of a reformist
Chinese leadership, coupled with the 1977–1978 Israeli-Egyptian peace
process, led to a slight modification of Chinese attitudes toward Israel.
Israelis holding foreign passports and third-party mediators helped pro-
vide cover for informal ties between Israel and the PRC, which was wary
of Arab criticism.9 At the same time, China continued to condition
formal ties on solving the Arab-Israeli conflict, and in 1979, China posed
a new requirement—the establishment of a Palestinian state.10
6 Mohammed Turki Al-Sudairi, “Among Old Friends: A History of the Palestinian Com-
munity in China,” Washington, D.C.: Middle East Institute, Center for Research and
Islamic Studies, March 27, 2015.
7 Shichor, 1994; Jonathan Goldstein, ed., China and Israel, 1948–1998: A Fifty Year Retro-
spective, Westport, Conn.: Praeger Publishers, 1999.
8 Shichor, 1994.
9 Shichor, 1994.
10 Hua Guofeng, “Report on the Work of the Government (Delivered at the Second Ses-
sion of the Fifth National People’s Congress, June 18, 1979),” Beijing Review, No. 27, July 6,
1979.
Nonetheless, since 1979, and more so since the mid-1980s, senior

Israeli-Chinese exchanges became more frequent. These exchanges
took place through the UN, other international organizations, and
academic and cultural associations. The peace process between Egypt
and Israel made China realize the importance of external mediation
in the Arab-Israeli conflict and, in 1984, China proposed holding an
international peace conference under the auspices of the five perma-
nent members of the UN Security Council to resolve the Arab-Israeli
conflict.11 The idea of such a conference required that the PRC adopt
a more balanced position, paving the way for more-extensive Israeli-
Chinese engagements.
In the summer of 1985, Israel reopened its consulate general
in Hong Kong, in part to reach out to China, and public meetings
between foreign policy officials, including UN Israeli and Chinese del-
egations, began to take place more frequently. In late 1987, a high-level
meeting took place between then–Foreign Minister Shimon Peres and
his counterpart Wu Xueqian, and by 1988, Israeli tourists were flock-
ing to China. That year, China recognized the State of Palestine and
upgraded its ties with the PLO, but that did not affect the course of
Israeli-Chinese ties.12
The Western nations isolated the PRC after the Tiananmen
Square incident in 1989, and sanctions on China opened the door for
closer ties with Israel for arms sales. Other ties also started advanc-
ing. That year, China International Travel Service opened an office in
Tel Aviv and a delegation of Chinese journalists visited Israel. Subse-
quently, Israel opened an academic center in Beijing.13 In 1990, China
11 Michael Dillon, “The Middle East and China,” in Hannah Carter and Anoushira-
van Ehteshami, eds., The Middle East’s Relations with Asia and Russia, London: Routledge
Curzon, 2004.
12
An Guozhang, “Palestine: Factions Unite, State is Born,” Beijing Review, Vol. 31, No. 48,
November 28–December 4, 1988, pp. 10–11.
13 Shichor, 1994.
essentially removed its preconditions of solving the Palestinian ques-

tion when then-President Yang Shangkun said that the PRC would
consider establishing ties with Israel “if it changes its hardline stance
and contributes to the peace efforts.”14
Following the first Gulf War, during which China aligned itself
with the West by supporting sanctions against Iraq, and the disinte-
gration of the Soviet Union, China paved its way back into the inter-
national community. After the 1991 Madrid peace conference on the
Arab-Israeli conflict, and as preparations were taking place for the
January 1992 multilateral peace conference in Moscow, the PRC and
Israel established formal ties.15
Since then, China’s stated policy on the Israeli-Palestinian con-
flict has not fundamentally changed, and like most of the international
community, China supports the establishment of an independent Pal-
estinian state alongside Israel, as it regularly makes clear in interna-
tional forums. In practice, however, this position has not prevented
the PRC from strengthening its relations with Israel.16 Israel, on the
other hand, has continued to face challenges stemming from the need
to balance its close ties with the United States with its efforts to build
a relationship with China.
Defense Technology Transfers Were the Bedrock of Ties

Until 2005
One of the key catalysts for Israeli-Chinese relations came in 1979,

when businessman Saul Eisenberg helped arrange a secret meeting
14 Quoted in Shichor, 1994, p. 202.

15
Avi Luvton, “An Economic Powerhouse and a Rising Hi-Tech Superpower—25 Years of
Diplomatic Relations Between China and Israel,” Times of Israel, March 23, 2017.
16 Telephone conversation with an expert on Israeli-Chinese ties, February 2018.
between the two sides that resulted in the first of many deals to transfer
defense technology from Israel to China. The 1979 Israeli delegation
to China, which used Eisenberg’s private jet, included such defense
industry officials as Gabriel Gidor, the chief executive officer (CEO) of
Israel Aerospace Industries, and senior officials from the Israeli foreign
and defense ministries.17 China was interested in developing the rela-
tionship for several reasons. First, it was impressed with Israeli military
technology and China was intent on upgrading its military, especially
in the wake of the Sino-Vietnamese War. Second, partly via its wars in
the Middle East, Israel had access to Soviet military technology and
was familiar with Soviet military doctrine. As a result, Israel could help
China upgrade its Soviet-made equipment.18
Over the following two decades, military technology transfers
between Israel and China totaled between $1 billion and $2 billion
in more than 60 transactions, all of which were conducted in secrecy.
These transactions allegedly included technology to upgrade Chinese
tanks, night vision systems, electronic warfare systems, Python-3 air-
to-air missiles, fighter aircraft technology, and unmanned aerial vehicle
(UAV) technology.19 Although Israeli officials visited China frequently,
sometimes carrying foreign passports or assisted by third-party media-
tors, Chinese officials did not visit Israel until ties were formalized
in 1992.20 In 1985, China issued formal visas to nine Israeli agricul-
17 Yaakov Katz and Amir Bohbot, “How Israel Used Weapons and Technology to Become
an Ally of China,” Newsweek, May 11, 2017.
18 Islam Ayyadi and Mohammed Kamal, “China-Israel Arms Trade and Co-Operation:
History and Policy Implications,” Asian Affairs, Vol. 47, No. 2, 2016; Aron Shai, Sino-
Israel Relations: Current Reality and Future Prospects, Memorandum No. 100, Institute for
National Security Studies, Tel Aviv, September 2009.
19
Yoram Evron, “Between Beijing and Washington: Israel’s Technology Transfers to
China,” Journal of East Asian Studies, Vol. 13, No. 3, 2013.
20 Shichor, 1994.
tural experts, including a governmental official.21 Still, notwithstand-

ing some deals in agriculture and other industries, and although the
establishment of diplomatic relations in 1992 opened up the Chinese
market to other Israeli companies, most business between China and
Israel during this period centered on military technology.22
In the late 1990s and early 2000s, the defense relationship expe-
rienced two major setbacks that had a lasting effect on Israel-China
relations and resulted in changes to Israel’s export control system. The
first major crisis occurred in 2000 when Israel yielded to U.S. pres-
sure and canceled a deal to install the PHALCON advanced airborne
radar system on surveillance planes for the PLA Air Force. The United
States had been aware of the transaction since the mid-1990s, when the
agreement was signed, but growing worries about China contributed
to U.S. objections in 1999.23 As reported in one analysis, the United
States was concerned that such early warning capabilities would enable
China to gain greater control of airspace and tip the balance of power
in a U.S.-China conflict, particularly in the Taiwan Strait.24 However,
although there is agreement regarding the issue of control of airspace,
the United States was actually concerned about conflict with China
more generally.25 Furthermore, despite Israeli claims to the contrary, the
United States contended that the PHALCON was a U.S.-originated
technology.26
21 Katz and Bohbot, 2017.

22 Evron, 2013.
23 P. R. Kumaraswamy, “Israel-China Relations and the Phalcon Controversy,” Middle East
Policy, Vol. 12, No. 2, 2005.
24 Suzanne Goldenberg, “Israel and U.S. Clash over Spy Plane Sale to China,” The Guard-
ian, April 9, 2000.
25 Telephone conversation with a former U.S. official who worked on defense issues related
to Israel in the late 1990s and early 2000s, August 2017.
26 Telephone conversation with a former U.S. official who worked on defense issues related
to Israel in the late 1990s and early 2000s, August 2017.
Israel’s significant error with the PHALCON was to lobby Con-

gress directly for permission to export the technology to China. In
accordance with the U.S. administration, Congress had no desire for
China to gain the technology embedded in the PHALCON. Israel’s
supporters from both parties were deeply unhappy with this behavior,
and Israel pulled back.27 The damage to U.S.-Israel ties was compart-
mentalized and the incident reportedly did not affect the overall rela-
tionship. It did, however, lead to greater scrutiny and suspicion about
third-party transfers.28
When Israel canceled the PHALCON deal, it compensated
China $350 million in damages, including repayment of $190 million
that the PRC had paid in advance.29 Although it was embarrassing
to Israel, this incident did not significantly affect relations, as China
chose primarily to blame the United States.30
The second incident took place in 2005 and involved upgrades—
or maintenance, according to Israeli sources—to HARPY UAVs. This
disagreement resulted in the severance of defense relations between
Israel and China and in major changes to the structure of Israel’s
export control regime. Israel originally sold the UAVs to China in the
1990s and was later contracted to do maintenance on them. However,
a crisis erupted in 2005 when the United States discovered that the
maintenance would include upgrades and accused Israel of deceiving
the United States about the nature of the work.31 According to a former
27 Telephone conversation with a former U.S. official with Middle East–related experience
in several branches of government, August 2017.
28 Telephone conversation with a former U.S. official with Middle East–related experience
in several branches of government, August 2017.
29
Amnon Barzilai, “Israel, China Agree on Compensation for Canceled Phalcon Deal,”
Haaretz, March 13, 2002.
30 Kumaraswamy, 2005.
31 Yitzhak Shichor, “The U.S. Factor in Israel’s Military Relations with China,” China Brief,
Vol. 5, No. 12, May 24, 2005.
senior official at the U.S. National Security Council (NSC), “this inci-
dent almost ruined the special relationship with Israel.”32 A former
senior official with Israel’s MOD recalled that members of Congress
warned him at the time that Israel was seen as a “threat to U.S. national
security.”33 During the HARPY incident, the United States stopped
cooperation with Israel on the F-35 Joint Strike Fighter program, and
U.S. pressure resulted in lasting changes to Israel’s relationship with
China.34
The United States insisted that Israel cut off the HARPY deal.
In addition, it demanded the resignation of senior MOD officials
and an agreement—or “understandings,” according to Israelis—that
all defense transfers and dual-use exports to China be subject to U.S.
approval. These additional consultation mechanisms between the U.S.
Department of State and the Israeli MOD “put an end to China-Israel
defense technology relations.”35 The HARPY incident gave rise to Isra-
el’s 2007 Export Control Law, which expanded the requirements for
export licenses and placed restrictions on arms sales and the export
of dual-use technology.36 According to former Israeli officials, this
compromise was needed, although unprecedented in the way it under-
mined Israel’s independent decisionmaking vis-à-vis senior personnel
(appointments within the MOD) and foreign and economic relations
with a third country.37
32 Conversation with a former senior official at the NSC, Washington, D.C., May 2017.
33 Conversation with a former senior official at Israel’s MOD, Tel Aviv, December 2017.
34 RanDagoni, “Harpy UAV Compromise with U.S.: No Upgrades for China,” Globes,
May 25, 2005.
35 Yoram Evron, “Israel’s Response to China’s Rise: A Dependent State’s Dilemma,” Asian
Survey, Vol. 56, No. 2, March/April 2016; Evron, 2013.
36 Evron, 2013.
37 Conversation with a former senior official at Israel’s MOD, Tel Aviv, December 2017.
These incidents highlight the influence of the United States in

Israeli foreign affairs and the balancing act Israel continues to play
between great powers as it navigates its relations with China. Israel
could benefit economically and strategically from a closer relation-
ship with China, but its dependence on the United States for military
equipment, aid, and international support gives Israel little room to
maneuver because Washington views Beijing as a potential adversary.
The Shift from Defense Cooperation to Economic

Cooperation
Although defense relations were severed after the HARPY incident

and the frequency of high-level official visits dropped, the economic
relationship between China and Israel was well established in other
areas by 2005 and continued to grow. As subsequent chapters show,
the Israel-China relationship is driven primarily by economic consid-
erations, although political relations have been steadily improving and
some limited military connections have been restored. The catalyst for
these bilateral ties remains Chinese interest in Israeli advanced technol-
ogy and Israeli pursuit of access to the large Chinese market.38
Prime Minister Netanyahu prioritized relations with the PRC
in 2013, shortly after he began his third premiership. His first trip
to China was associated with another clash with authorities in the
United States, although in a very different way than the HARPY and
PHALCON issues. The Chinese government conditioned Netanya-
hu’s visit on Israel ending a court case that it had originally pressed for-
ward. Specifically, the Chinese asked that Netanyahu guarantee that
senior defense officials would refrain from testifying in a federal court
trial in New York against the state-owned Bank of China, which was
accused of laundering Iranian money for terror activity by Hamas and
38 Poulin, 2014; Liu Zhen, 2017a.

Palestinian Islamic Jihad. Netanyahu agreed.39 Israeli Ambassador to

the United States Michael Oren returned to Israel to convey the mes-
sage he had received from the administration and Congress, which
was that to them, Israel’s actions were a betrayal regarding both the
fight against terrorism and geopolitical competition between China
and the United States. Furthermore, the message conveyed shock that
Netanyahu, known as “Mr. Terror” for his approach to counterterror-
ism, would take such an action.40 In 2015, after nine years of proceed-
ings, what had been described as “the most significant and contentious
terrorism financing case ever filed in New York” was dismissed. The
formal reason was the lack of expert witnesses.41
Netanyahu’s decision in 2013 to heed the PRC’s threats and pri-
oritize his planned visit to China over a historic terrorism court case,
even at the price of clashes with the United States, was a turning point
in modern Israeli-Chinese ties. Upon his return from China, Netan-
yahu passed Government Resolution 251, which directs the expansion
39 In 2008, the family of Daniel Wultz—a 16-year old (and a relative of Rep. Eric Cantor,
former House Majority Leader) who died in a suicide terror attack in Tel Aviv in 2006—
launched legal action against the Bank of China. The case represented the families of 20
American victims of terror attacks that took place in Israel from 2003 to 2008. They sued
the Bank of China’s branch in Guangzhou for funneling Iranian money to Palestinian ter-
rorist organizations that backed the attacks that killed Daniel Wultz and the other victims.
Israel reportedly urged the family to start legal proceedings and promised to provide them
with evidence, including expert witnesses. One of these witnesses was a former counterter-
rorism official named Uzi Shaya, who had tracked the Bank of China case and pressed it to
close the problematic accounts, to no avail. In 2013, however, as Netanyahu’s visit to China
was approaching, Shaya told the Wultz family he was threatened by Israeli officials not to
testify in the case. The Wultz lawyers subpoenaed him to force the testimony, but Israel
answered on his behalf “by filing a petition against the Wultz family . . . arguing that any
testimony could harm Israeli security by revealing state secrets.” More details are available in
Roger Cohen, “Did Israel Put Money over Justice?” New York Times, February 28, 2015.
40 Shimon Shiffer, “U.S. Outraged After Israel Backs Out of Terror Suit,” Ynet News,
July 15, 2013.
41 Yonah Jeremy Bob, “Exclusive: Historic Case Against Bank of China for Millions in
Terror Financing Dismissed,” Jerusalem Post, August 11, 2015.
of all nonsensitive aspects of Israeli-Chinese cooperation.42 The Reso-

lution was followed by additional government directives, including the
appointment of the head of the National Economic Council to lead the
expansion of ties with China; the creation of different working teams;
and specific incentives for different ministries to cooperate with Chi-
nese companies.43 Ministers of Finance and Housing promoted deals
to bring Chinese construction workers and, for the first time, Chinese
construction companies to Israel. In 2013, the Ministry of Economy
began closing economic attaché offices in the United States and Europe
and instead opened offices in China.44 The Minister of Transportation
continued promoting tenders to Chinese companies.
Conclusion
As subsequent chapters will show, the shift to economic cooperation

has led to a major expansion of bilateral ties, including significant
Chinese investment and construction activity in Israel. According to
a former senior Israeli official, this shift and the subsequent expansion
of economic ties were widely supported and not accompanied by a dis-
cussion about the possible implications to Israel of expanding Israeli-
Chinese ties.45 As noted in Chapter One, some Israeli officials have
even suggested that they are open to easing the restrictions on dual-use
42 Prime Minister’s Office, “Tochnit le’kidum ve’harchavat ha’ksharim ha’kalkaliyim bein

Israel v’Sin” [“A Plan to Promote and Expand the Economic Relations Between Israel and
China”], Jerusalem, June 5, 2014.
43 Prime Minister’s Office, 2014.
44 Yuval Azulay, “Rotsim La’avod Be’chul: 2,200 Muamadim al 12 Misrot Nispachim Mis-
chariyim” [“Want to Work Abroad: 2,200 Candidates for 12 Commercial Attaché Posi-
tions”], Globes, December 2, 2013.
45 Telephone conversation with a former official at the Ministry of Economy, April 2018.
and defense technology exports. However, the MOD has resisted.46 As

Israeli-Chinese economic and other ties deepen, more points of con-
tention between the United States and Israel could arise, including the
issue of dual-use and defense technology exports, which would place
Washington firmly in the middle of Israel-China relations.
In part, this is because of Chinese investment in Israeli technol-
ogy companies and venture capital firms that invest in dual-use tech-
nology.47 In addition, defense relations have been warming. High-level
military visits resumed in 2011, when Defense Minister Ehud Barak—
who had earlier canceled the PHALCON deal as prime minister—
visited China.48 Two months later, the chief of the PLA General Staff
Department visited Israel, and the two parties vowed to strengthen
military ties.49 However, Israel is still cautious about Washington’s
reaction to such ties, so military cooperation is limited to areas that
will not be sensitive to the United States, such as providing counter-
terrorism (CT) training to Chinese troops.50 Such training could have
other implications for Israel’s international standing, however, if it were
being used in ongoing Chinese repression in Xinjiang.
Beyond the U.S. defense connection, several former and cur-
rent Israeli Knesset members and officials started raising PRC-related
concerns in 2017, such as China’s cyber espionage record; corruption
allegations; the links between Chinese companies and China’s govern-
ment; and the issue of having a foreign entity control major infrastruc-
46 Coren, 2014.
47 “Israel’s Ties with China Are Raising Security Concerns,” The Economist, October 11,
2018.
48 Evron, 2016.
49 “China, Israel Vow to Improve Military Ties,” Xinhua, August 15, 2011.
50 Agence France-Presse, “China Seeking Israeli Counter-Terror Experts,” Times of Israel,
July 10, 2014; Mercy A. Kuo and Angelica O. Tang, “The U.S.-China-Israel Defense
Dynamic: Strategic Common Ground,” The Diplomat, May 11, 2015.
ture, including infrastructure that might be integral to Israeli securi-

ty.51 China’s support for the Palestinians in the UN and its strong ties
with Israel’s regional adversaries, especially Iran, continue to pose other
challenges.52 We expand on these issues in subsequent chapters.
51 Such concerns are reported in Yossi Melman, “Cause for Concern? Chinese Investment
and Israel’s National Security,” Jerusalem Post, April 7, 2018.
52 One official explained that Israel does not anticipate that China will vote in its favor in
the UN anytime soon (conversation with an official in Israel’s Ministry of Foreign Affairs,
Jerusalem, July 19, 2017).
CHAPTER THREE
Chinese Perceptions of and Interests in Israel
China has pragmatic reasons for its abiding interest in Israel. A review
of recent Chinese writings and trends in bilateral relations between the
two countries indicates that China sees Israel as a particularly useful
partner in achieving four broad policy goals. First, and most impor-
tant, Chinese analysts and officials tend to view Israel as a country that
can help China spur indigenous innovation and R&D as the country
continues its economic and military modernization. Second, China
looks to Israeli policies, experience, and technology in defense, secu-
rity, cyber, and CT as a means of promoting China’s own needs in
military and domestic security capabilities. Third, China views Israel
as an important player in China’s overall Middle East policy and seeks
to balance its historically close relations with other countries in the
region with increasing ties with Israel. Within this geostrategic context
might lie an effort on the part of China to make inroads with a key
U.S. ally in the region with the intent to undermine global U.S. alli-
ance and partner networks. Finally, China sees Israel as an important
component of the BRI.
Beyond these interests, an analysis of Chinese attitudes toward
Israel reveals a mixed picture. As of the mid-2010s, in most areas of
trade, investment, security, and diplomacy, Chinese policymakers and
academics communicated a highly favorable perception of Israel. This
positive image begins with an officially professed Chinese admiration
25
for Jewish culture and traditions.1 In addition, many ordinary Chinese

citizens feel a certain affinity for what they believe to be a kindred civi-
lization and culture that values the importance of family, hard work,
and education. At the same time, PRC officials occasionally criticize
Israeli policies, especially concerning the Palestinians, and the general
positive feeling toward Israel does not necessarily reflect the public
Chinese sentiment as reflected in polls. In this chapter, we discuss each
of China’s broad goals with respect to its bilateral relationship with
Israel, provide insight into Chinese attitudes toward Israel, and con-
clude with what Chinese views and posture toward Israel mean for
China’s policy toward the region.
A Model for High-Tech Innovation
In his March 2017 visit with Chinese President Xi, Israeli Prime Minis-
ter Netanyahu announced the establishment of a “comprehensive part-
nership for innovation” between Israel and China.2 This initiative was
developed after Netanyahu’s May 2013 visit to China, in which the two
governments created five task forces in the fields of “high technology,
environmental protection, energy, agriculture and financing.”3 The
two sides would reportedly “put priority on strengthening cooperation
1 Benjamin Ivry, “Why Are the Chinese So Obsessed with the Jews?” Forward, July 20,
2016.
2 Although the term partnership was used in this context, experts explain that China sees
Israel as a U.S. ally that will choose Washington if it faces a choice between Beijing and
Washington. In addition, China sees the Arab states and Iran as its natural partners in the
Middle East, and this excludes the option of partnership with Israel (authors’ correspondence
with an Israeli expert on China, September 2018).
3 Gao Yanping, “China-Israel Relations Are Bound to Blossom,” Jerusalem Post, April 3,
2014.
Chinese Perceptions of and Interests in Israel 27
in the fields of scientific and technological innovation, water resources,

agriculture, medical care and public health, and clean energy.”4
China’s Vice President, Wang Qishan, a close confidant of Presi-
dent Xi, visited Israel in October 2018 to take part in the China-Israel
Joint Committee on Innovation Cooperation. He was accompanied
by representatives of 13 ministries.5 During his visit, Wang praised
Israel, saying that “Israel leads the world in electronics, information
technology, modern medicine, and agriculture. China is still striving
to achieve modernization.”6 His statement illustrates what China seeks
most from Israel: to learn from policies and practices that Israel has put
in place regarding innovation and entrepreneurship as China attempts
to shift its economy from one that is investment- and export-led to one
that is consumption- and innovation-led.
From China’s perspective, Israel represents a success story of how
a “start-up nation” with a small population can innovate at a high
level and produce large multinational technology companies that are
competitive in the global economy.7 Israel’s success story contributes
to existing stereotypes in China of Jews as smart, entrepreneurial,
resourceful, and wealthy.8 In this context, the Chinese see the Israeli
economy in general and its science and technology industry in par-
ticular as especially useful. As China goes about restructuring its own
4 Liu Hua, “Xi Jinping Meets with Israeli Prime Minister Netanyahu,” Xinhua, March 21,
2017.
5 Lilach Baumer, “Chinese Vice President Wang Qishan Lands in Israel for Official Visit,”
Calcalist Tech, October 22, 2018.
6 Baumer, 2018.
7 The term start-up nation comes from Dan Senor and Saul Singer, Start-Up Nation: The
Story of Israel’s Economic Miracle, New York: Hachette Book Group, 2009.
8 James R. Ross and Song Lihong, eds., The Image of Jews in Contemporary China,
Boston, Mass.: Academic Studies Press, January 2016; Chu Ke [褚兢], 16 Reasons Why
Jews Get Wealthy [犹太人:16个致富法则], Bai Hua Zhou Wen Yi Publishing House
[百花洲文艺出版社], 2018.
economy, it seeks to learn from the Israeli model of innovation, espe-

cially given Israel’s natural resource constraints.9
One of the ways that China tries to benefit from Israel is through
investment to gain access to technology and learn from Israeli innova-
tion practices. For about a decade through the middle of the 2010s,
China’s investments into Israel were largely in agriculture and the
food industry, although they were tilted toward the technology side of
that industry. These included China National Chemical Company’s
(ChemChina’s) acquisition of Israeli agrochemical and crop protection
company Adama (formerly Machteshim Agan Industries) in 2011 and
China Bright Food Group’s takeover of Israel’s Tnuva Food Industries
in 2015. These transactions helped improve Chinese productivity and
gain a foothold in the bio-agriculture market.
Since the mid-2010s, however, China has focused on investments
in technology start-ups in Israel, from Chinese telecom powerhouse
Huawei’s bid for Israeli cybersecurity firm HexaTier to venture capital
investments by China’s PingAn Ventures and China Broadband Capi-
tal into IronSource, an Israeli telecom company that offers digital con-
tent and technology for software developers and mobile carriers.10 Data
are regrettably spotty, but one recent report noted that the number of
Chinese companies investing in Israeli high-tech entities rose from 18
in 2013 to 34 in 2017 and that annual Chinese investment in start-ups
from 2015 to 2017 was in the range of $500 million to $600 million,
12 percent of all capital raised by Israeli start-ups during that period.11
9 Fan Jida [樊继达], “How Israel Became an Innovation-Driven Nation”

[以色列如何成为创新驱动型国家], Journal of Theory Guidance [理论导报], December
2016.
10
Julie Zhu and Tova Cohen, “China’s Tech Money Heads for Israel as U.S. Welcome
Wanes,” Reuters, May 10, 2017.
11 Gil Press, “China and Israel: A Perfect Match, Growing Steady,” Forbes, February 26,
2018.
We discuss some of these technology investments in more depth in

Chapter Five.
In addition to information technology (IT), China looks to Israel
as a model in green technology and agricultural development. Several
articles in Chinese newspapers and journals highlight Israel’s innova-
tive practices in agriculture and biotechnology, especially given that
Israel is not endowed with large amounts of arable land and contends
with the problem of desertification.12 Chinese scholars highlight Israeli
technology in solar energy, sustainable transport, electric cars, desali-
nation, osmosis, water and waste treatment, and irrigation practices as
particularly useful for Chinese needs.13
Finally, the two countries have stepped up partnerships in R&D,
venture capital, and people-to-people exchanges. As of June 2015,
China announced that it would invest $500 million in venture capital
funds into Israel over the following few years.14 In October 2017, Chi-
nese e-technioncommerce giant Alibaba announced that it was opening
an R&D lab in Tel Aviv to cultivate IT talent in Israel and abroad.15 All
of this activity comes on the heels of expanded academic and people-
to-people exchanges and increased visa programs for foreign exchange
students visiting both countries. Israel’s leading high-tech university,
the Technion–Israel Institute of Technology, announced in 2013 that
it would open a campus at Shantou University in Guangdong Prov-
ince.16 In 2015, the Israeli Council for Higher Education and the Chi-
12 Yang Zhuang [杨状], “The Inspiration Behind Israel’s Innovation” [以色列创新的启迪],

Economic Observer [经济观察报], March 21, 2014.
13
Li Xiaoxi [李晓西], “Israel’s ‘Green Congress’ Project and Others” [以色列“绿色国会”项
目考察及其它], Globalization [全球化], Vol. 6, 2015.
14 Idan Rabi, “China VC to Invest $500m in Israel in 2015,” Globes, June 3, 2015.
15 “Alibaba to Open Israel R&D Center,” Globes, October 11, 2017.
16 Aryeh Tepper, “China’s Deepening Interest in Israel,” The Tower, No. 30, September
2015.
nese Ministry of Education agreed to establish the Israel-China 7+7

Research University Alliance to promote research and academic coop-
eration between research universities in Israel and China.17 We elabo-
rate on scientific academic collaboration between Israel and China in
Chapter Four.
Defense, Security, and Counterterrorism
Israel’s experiences waging wars and combating terrorism offer a unique

base of knowledge from which Chinese policymakers and strategists
can study and learn. Since 1948, Israel has been party to multiple mili-
tary conflicts with several Arab countries in the region and has engaged
in CT campaigns against various groups, such as the PLO, Hezbol-
lah, and Hamas. As a result of these challenges and experiences, Israel
has developed a formidable military force and renowned CT exper-
tise. Chinese writings highlight Israeli conventional military capabili-
ties, CT policies, and information security as three areas that Chinese
civilian and military planners can incorporate into China’s own capa-
bilities. Given Chinese reports of terrorist activities and unrest in the
western province of Xinjiang—home to the Uighurs, an ethnic Turkic,
Muslim population—and in other minority areas within China’s bor-
ders, China is eager to glean best practices from the Israeli experience.
First, although China has made great strides in modernizing its
military, it lacks actual military experience, and thus looks to other,
more experienced actors after which to model its development. Chi-
nese access to Israeli military technology has been limited, but China
still looks to Israel for other inputs into military modernization. Arti-
cles in Chinese defense journals highlight Israeli defense leadership;
17 Carice Witte and Yehuda Sunshine, “Israel & the Belt & Road Initiative Blue Book
Essay,” Sino-Israel Global Network & Academic Leadership Perspectives, April 26, 2017, p. 10;
XIN Center, “China-Israel 7+7 Research Universities Alliance,” webpage, undated.
command and control; combat effectiveness; defense mobilization; and

the defense industrial base, including arms sales and UAVs, as skills
and capabilities from which China can learn.18 On the whole, Israeli
defense modernization draws universal praise from Chinese military
academic circles as worthy of emulation.
Second, Chinese analysts highlight Israeli CT policies as being
particularly effective. One article praises Israel’s “advanced techniques
for detecting and thwarting terrorist attacks on Israeli soil.”19 “As a
victim of Eastern Turkistan Islamic Movement activities in Xinjiang,”
the author claims, China can “use Israel’s counter-terrorism experience
as a reference in its own operations.” Another article, written by an
officer at the China Criminal Police College, takes a historical look
at Israel’s CT experiences and assesses that “China and Israel are two
states that have long suffered from terrorism and non-traditional secu-
rity threats” and that these challenges “provide the basis for increased
18 Zheng Zhen [郑贞], “Israel’s Defense Leadership System” [以色列国防军领导体制],

International Research Observer [国际研究参考], Vol. 5, 2014; Zhang Linfei [章林飞],
“Combat Spirit Education within the Israeli Military” [以色列军民的战斗精神培育],
Political Workers [政工导刊], Vol. 5, 2015; Yan Zhonglin and Hao Jianying [闫忠林,
郝建英], “The Impetus and Characteristics Behind Israeli Arms Sales”
[以色列军火贸易的动因与特点], Social Science Review [社科纵横], Vol. 30,
No. 8, August 2015; Chu Kuolin [初阔林], “Israeli Defense Mobilization and Its Les-
sons for Chinese Defense Education” [以色列国防动员对我国国防教育的启示], Sci-
ence and Technology Information [科技信息], Vol. 21, 2011; “Israel’s Military Empha-
sizes Its Top Position Among Operators of Unmanned Aerial Vehicles”
[以色列军队强调人在操控自主无人机中的首要地位], Conmilit [现代军事], Vol. 11,
2016; and Li Mei [李梅] “A National Army—Israel’s Military Power” [兵之国—
以色列的军事力量], Ordnance Knowledge [兵器知识], Vol. 6, 2014.
19 Guliazhati Tuerxun, “Israel’s Anti-Terrorism Mechanisms and Its Enlightenment
to China” [以色列反恐机制及其对我国的启示], Journal of Xinjiang Police College
[新疆警察学院学报], Vol. 35, No. 4, November 2015.
counter-terrorism training and exercises amongst the police and mili-

tary forces of each country.”20
Finally, Chinese commentators emphasize Israeli capabilities in
network and information security related to terrorism and defense.
Chinese analysts highlight how Israeli private and government enti-
ties have developed an array of advanced cyber capabilities, such as
offensive and defensive electronic warfare, data encryption, and social
media–monitoring techniques to locate persons of interest.21 One article
analyzes the role of the Israeli government in promoting cyber defense.
The author claims that Israel confronts a large number of cyberat-
tacks and has fashioned various national cyber initiatives to combat
the threat, such as the 2010 National Cyber Initiative and the Israeli
government’s Resolution No. 3611.22 The author assesses that Israel’s
unique approach to R&D and the integration of private industry, aca-
demia, and military establishments make its cyber defense policy par-
ticularly notable for a Chinese context.23
The Geostrategic Importance of the Middle East
Chinese analysts view Israel as an important actor within China’s over-

all Middle East policy. China has taken steps to raise its profile in the
20
Lu Peng [芦鹏], “Feasibility of Anti-Terrorism Cooperation Between China and Israel”
[中国与以色列加强反恐合作的可行性分析], Journal of Jiangnan Society University
[江南社会学院学报], Vol. 17, No. 3, September 2015.
21
“From a ‘Newly-Established Country’ to a ‘Cyber Security Country’—What Israel Is
Doing Right” [从“初创国家”到“网络安全国家” 以色列做对了什么], China Economic
Observer [中国经济周刊], July 19, 2016; and Xu Meng and Yang Lei [许萌, 杨蕾], “Pre-
emption: A Study of Israeli Network Operations” [先发制人,以色列网络作战问题研究],
Military Digest [军事文摘], Vol. 7, 2017.
22 Ai Rengui [艾仁贵], “Cybersecurity in Israel and Its Governance” [以色列的网络安全问题
及其治理], Journal of International Security Studies [国际安全研究], Vol. 2, 2017.

23 Ai Rengui, 2017.
Middle East in search of greater influence in a region of great geo-

strategic importance. From Beijing’s perspective, all great powers in
the modern era have been prominent players in the Middle East, and
it seeks to be seen as a true great power.24 It remains one of the only
outside major powers that maintains cordial relations with every gov-
ernment in the Middle East, including those of Iran, Saudi Arabia, the
Palestinian Authority, and Israel. The PRC has largely succeeded in
sustaining friendships with all countries by staying aloof from regional
politics.25 Thus, China has not issued a white paper on the Middle
East as it has done for Africa and other issues of major importance to
China. Instead, the Ministry of Foreign Affairs issued China’s Arab
Policy Paper in January 2016, which was mostly full of platitudes. That
paper did not address Israel at all, except for in one specific policy posi-
tion: “China supports the Middle East peace process and establishment
of an independent state of Palestine with full sovereignty, based on the
pre-1967 borders, with East Jerusalem as its capital.”26
Keeping a low-key relationship with Israel has been part of Chi-
na’s Middle East strategy to ensure the ongoing flow of energy from
the region and to continue to reap economic benefits with numerous
Arab states and Iran. For that reason, China has sought to portray itself
as a champion of the Palestinians and a good friend of the Arab world.
Moreover, China seeks to portray itself as a good friend of Islam, which
stands at odds with the restrictive and harsh treatment of Muslims
within China’s borders. The objective of this effort is to protect Beijing
24
Andrew Scobell and Alireza Nader, China in the Middle East: The Wary Dragon, Santa
Monica, Calif.: RAND Corporation, RR-1229-A, 2016, pp. 15–19.
25 Scobell and Nader, 2016, pp. 5–6.
26 Ministryof Foreign Affairs of the People’s Republic of China [中华人民共和国外交部],
China’s Arab Policy Paper [中国对阿拉伯国家政策文件], Beijing, January 2016.
from criticism from Muslim countries.27 And indeed, thus far it has
been successful at preventing such criticism.
Despite the geostrategic importance of the Middle East, PRC
President Xi was slow to visit the Middle East, making his first trip
to the region in 2016, almost three years after taking office. This visit
coincided with the release of China’s Arab Policy Paper and included
visits to Egypt, Saudi Arabia, and Iran, but not to Israel. In Cairo,
Xi delivered a formal address at the headquarters of the Arab League,
while in Tehran and Riyadh, he worked to strengthen Beijing’s endur-
ing relations with each of these Middle East powers and expand eco-
nomic cooperation.28 However, despite other senior visits, including
one in October 2018 by Vice President Wang, Xi has yet to visit Israel.
There are two clear areas of divergence between Chinese and
Israeli interests in the Middle East. These concern the Palestinians and
Iran. First, China has been a longtime supporter of the Palestinian
cause and has sought to bolster its soft-power status with many Arab
states that feel disenfranchised from the Middle East peace process and
disrespected by the West in general. China was one of the first nations
to recognize the Palestinian state in the UN and does not consider
Hamas a terrorist organization.29 In 2002, Beijing appointed a “special
envoy” to the Middle East and has since released various proposals for
conflict resolution in the region.30 The most recent manifestation of
China’s position toward the Israeli-Palestinian conflict was evident in

28 See, for example, Ting Shi, “How China Is Building Bridges with the Middle East,”
Bloomberg News, January 26, 2016.
29 Scobell and Nader, 2016.
30 Matt Schiavenza, “What Is China’s Plan for the Middle East?” The Atlantic, May 10,
2013. This issue is handled comprehensively in Degang Sun and Yahia Zoubir, “China’s
Participation in Conflict Resolution in the Middle East and North Africa: A Case of
Quasi-Mediation Diplomacy?” Journal of Contemporary China, Vol. 27, No. 110, 2018,
pp. 224–243.
December 2017, when China denounced the U.S. recognition of Jeru-

salem as Israel’s capital and voted in favor of a UN General Assem-
bly resolution rejecting the U.S. announcement.31 Reportedly, Chinese
Ambassador to the UN Liu Jieyi said that China “supports the cause of
the Palestinian people,” adding that “this will never change.”32
China’s declarations about solving the Israeli-Palestinian conflict
are seen as symbolic gestures aimed at projecting its image as a great
power accepting its responsibilities and playing a significant role in the
Middle East rather than as serious proposals. Indeed, one Israeli ana-
lyst has assessed China’s involvement in the Middle East peace process
as “merely diplomatic rhetoric,” and China’s impact has been assessed
as having “hardly been felt.”33 Israeli officials agree that official PRC
actions regarding the Palestinians do not reflect their stated policies,
which are seen more as lip service.34
China has frequently opposed any military actions against Iran
and does not consider the Tehran-backed Lebanese Hezbollah as a ter-
rorist organization.35 China also has supplied hundreds of millions of
dollars of weapons to Iran since 2000. In fact, Beijing is second only to
Moscow in terms of the value of armaments sold to Tehran during the
2000s.36 Beijing has a long history of cooperation with Tehran’s missile
and nuclear programs and has provided Iran with hundreds of anti-
31 Gao, 2017.
32 Noa Landau, “In Blow to Trump and Netanyahu, UN Rejects U.S. Recognition of Jeru-
salem as Israel’s Capital,” Haaretz, December 21, 2017.
33
Mordechai Chaziza, “China’s Policy in the Middle East Peace Process After the Cold
War,” China Report, Vol. 49, No. 1, 2013, pp. 161–199.
34 Discussion with an Israeli Ministry of Foreign Affairs official, Santa Monica, California,
October 2018.
ship and anti-aircraft cruise missiles.37 This relationship has at times

undermined China’s efforts in cultivating closer relations with Israel.38
Finally, some policymakers in China might view China’s relation-
ship with Israel as an opportunity to make inroads with a key U.S. ally
in the Middle East as part of a broader strategy by China to under-
mine U.S. diplomacy and global alliance and partner networks. China
clearly understands the close alliance that exists between Israel and the
United States, to include closely monitoring U.S. arms sales to Israel
and their implications for China.39 China also perceives U.S. alliances
in Asia, but also in other parts of the world, as inherently antitheti-
cal to Chinese interests and in some cases seeks to actively undermine
their value and utility.40 Chinese scholars have devoted attention to the
37 See, for example, John Garver, “China-Iran Relations: Cautious Friendship with Ameri-
ca’s Nemesis,” China Report, Vol. 49, No. 1, 2013, p. 84.
38 China has a close relationship with Pakistan, another potential Israeli adversary. In fact,
in 2016, Pakistan obliquely threatened a nuclear attack on Israel following a false report in
an obscure news outlet that Israel issued a conditional threat against Pakistan (Oded Yaron,
“Pakistan Threatens Israel with Nuclear War Because of Fake News Article,” Haaretz,
December 26, 2016). However, Israel and Pakistan have maintained clandestine contacts
almost since the founding of both countries. Although risk is always present and both have
at times acted against the other’s interests, they have also reassured each other that neither
would take hostile actions against the other (Moshe Yegar, “Pakistan and Israel,” Jewish
Political Studies Review, Vol. 19, No. 3/4, Fall 2007; and Shimon Arad, “How Israel and
Pakistan Can Avoid a Nuclear Showdown,” The National Interest, February 19, 2018). In
addition, each has far bigger challenges. We assess, therefore, that the China-Pakistan and
Pakistan-Israel relationships will have little effect on or be little affected by the China-Israel
relationship.
39 Liu Jun and Zhang Xuepeng [刘军, 张雪鹏], “A Preliminary Assessment of
American Arms Sales to Israel” [美国对以色列援助初探], Southwest Asia Studies
[西亚非洲], Vol. 4, 2007. See also “U.S. Sells Huge $38 Billion Military Aid Package to
Israel” [美国以色列达成巨额军事援助：10年380亿美元], Tencent QQ News, World Affairs
[国际时事], September 15, 2016.
40 AdamP. Liff, “China and the U.S. Alliance System,” The China Quarterly, Vol. 233,
March 2018.
history and value of the U.S.-Israeli alliance over time, for example.41
Therefore, in all likelihood, China views its relationship with Israel as
an extension of a larger effort to undermine key alliance relationships
with the United States and might look for opportunities to forge closer
ties with Israel at Washington’s expense.
There are limitations to Chinese influence in this regard. Given
China’s desire to be perceived as a nonaligned and noninterventionist
partner in the region, and considering China’s strong trade and mili-
tary ties with certain countries in the Middle East—some of which
have contentious relations with both the West and Israel—China
could encounter roadblocks that will limit closer relations with Israel.
Although China seeks to deepen its ties with Israel, it is also aware of
its limitations vis-à-vis supplanting the role of the United States within
Israeli foreign policy.42 Despite this recognition of its limitations, the
Chinese reportedly have hinted to Israelis that the geostrategic situ-
ation might well be different over the longer term—in 50 years, for
example—and might turn more in China’s favor.43 It is too early to say
whether this statement reflects Chinese intentions in the region in the
long run or pushes Israel to change its policies.
China’s BRI, however, offers one pathway to bringing Arab and
Israeli interests closer in alignment with China’s.
41 Zhang Yanfei [张彦飞], “Research on the Formation of the Relationship Between the
United States and Israel (1953–1968),” [美国与以色列“准联盟”关系形成研究 (1953–
1968)], Shanxi Normal University [陕西师范大学],2008; and Bingchi Jinping, “The
United States’ Influence Behind Israel’s Powerful Military,” [以色列强大军事力量背后,
折射出美国影子, 直接运来先进装备], Sina Blog of Bingchi Jinping, November 29, 2017.
42 Telephone conversation with a former U.S. official with extensive experience in Israel-
U.S. relations, August 2017.
43
Telephone conversation with a former U.S. official with extensive experience in Israel-
U.S. relations, August 2017.
The Belt and Road Initiative
Since President Xi unveiled in 2013 what was first referred to as “One

Belt One Road,” China has embarked on an ambitious program to
advance its engagement across Asia, Africa, Europe, and the Middle
East. The effort is envisioned to build a vast web of infrastructure—
roads, railways, ports, and pipelines—to link China to its neighbor-
hood and the wider world. Now known in English as the “Belt and
Road Initiative” (BRI), it includes an overland “Silk Road Economic
Belt” and an overwater “21st Century Maritime Silk Road” compo-
nent. The former consists of infrastructure linking China to Central
Asia, South Asia, the Middle East, and onward to Africa and Europe;
the latter envisions shipping routes through the South China Sea and
the Indian Ocean toward South Asia, the Middle East, Africa, and
Europe, with a spur to Oceania.
Although little attention has been paid to the role of Israel in
the BRI, Chinese policymakers clearly have their eyes on the country
as an important node within the BRI architecture. During Netanya-
hu’s March 2017 visit to China, President Xi said that the two coun-
tries would “steadily advance major cooperative projects within the
framework of jointly building the Silk Road Economic Belt and the
21st Century Maritime Silk Road.”44 Prime Minister Netanyahu also
brought up the BRI in his remarks, saying, “the Israeli side is ready to
actively participate in infrastructure and other cooperation under the
framework of the Silk Road Economic Belt and the 21st Century Mari-
time Silk Road.”45
Israel has the potential to be a small but important stop on the
21st Century Maritime Silk Road, connecting the Indian Ocean and
the Mediterranean Sea through the Gulf of Aqaba and the Suez Canal.
44 Liu Hua, 2017.

45 Liu Hua, 2017.
As we discuss further in Chapter Five, Chinese construction com-

panies have been increasingly involved in Israel’s transportation and
other infrastructure projects. The possible construction of a railway
line from Eilat to Ashdod—which is awaiting approval by the Israeli
government—and the construction of a new port in Ashdod, both
of which are being negotiated by Chinese engineering firms, serve as
prime examples of such an architecture.46 BRI routes require not only
sea ports, but also railways, logistic centers, warehouses, airports, and
transport system hardware and software. Israeli companies could con-
tribute to BRI projects by developing and integrating transportation
and logistics technologies and related systems for trains, aircraft, and
marine engineering, for example. One such Israeli company, Nextec
Technologies, which developed measurement technology for the auto-
motive and aviation industries, was acquired by a Chinese company in
2014.47
Chinese writings on the BRI highlight the latent potential of
Israel as a hub of China’s future BRI endeavors. In particular, Chi-
nese academics point out that Israel’s “well-endowed human capital,”
“developed economy and high technology base,” and “stable society
and government business environment” make the country a particu-
larly valuable asset for China’s BRI program in the long term.48 The
geostrategic significance of Israel within the BRI is also an important
factor mentioned by some Chinese authors, who view Israel’s location
near the Arab states as a “balancer” that can “lend credibility to Chi-
46 Dubi Ben-Gedalyahu, 2015; and Niv Elis, “Private Ashdod Port Building Ahead of
Schedule, Says Ports Company,” Jerusalem Post, April 12, 2016.
47 Galia Lavi, Jingjie He, and Oded Eran, “China and Israel: On the Same Belt and Road?”
Strategic Assessment, Vol. 18, No. 3, October 2015.
48 Xiao Xian [肖宪], “The Role of ‘One Belt One Road’ within Sino-Israeli Relations”
[‘一带一路’ 视角下的中国与以色列关系], Journal of Southwest Asia and Africa
[西亚非洲], Vol. 2, 2016.
nese soft power in the region.”49 Statistics appear to support such Chi-
nese assessments. According to one Chinese government investment
index, Israel is rated 22 out of 63 countries located along the 21st Cen-
tury Maritime Silk Road, and operational risk to Chinese investment
in Israel is considered to be lower than average among countries along
the route.50 At the same time however, Israel’s role in the BRI is likely
to be limited by its small size, limited transportation connectivity with
countries in its region, and lack of experience in large-scale projects.51
Mixed Attitudes Toward Israel

In addition to pragmatic reasons for expanding ties with Israel, Chi-
nese policymakers and academics have stated highly favorable percep-
tions of Israel, which begin with an officially professed Chinese admi-
ration for Jewish culture and traditions.52 Much has been written about
Chinese affinity for Judaism and the similarities between Confucian
and Jewish culture. In short, in China, Judaism is believed to be a
kindred civilization that values the importance of family, hard work,
and education.53 In addition, among Chinese leaders, there is a certain
respect and admiration for Israel as an ancient civilization. In an April
49 Xiao Xian, 2016.

50 Lavi et al., 2015. The statistics were based on Pu Zhuhua and Zhong Feiteng, The Blue
Ocean for Going Abroad: Investment Attractiveness Evaluation of One Belt One Road Countries
for Chinese Enterprises, Beijing: Social Science Academic Press, 2015, p. 125.
51 Yoram Evron, “OBOR’s Impact on Sino-Israeli Relations,” in Anoushiravan Ehteshami
and Niv Horesh, eds., China’s Presence in the Middle East: The Implications of the One Belt
One Road Initiative, Abingdon, UK: Routledge, 2018.
52 Ivry, 2016.
53 See for example Ivry, 2016; Chris Buckley, “Jewish and Chinese: Explaining a Shared
Identity,” New York Times, September 25, 2016; and Michael Goldfarb, “What Jews and the
Chinese Have in Common,” BBC News, February 8, 2014.
2010 interview given to the newspaper China Business News, China’s

then–Special Envoy on the Middle East Issue, Wu Sike, described
China and Israel as two ancient civilizations that respect and admire
one another.54
However, this attitude is by no means unique to the case of
Israel. For example, in 2016, ahead of his visit to Egypt, Xi Jinping
penned an editorial in the Egyptian newspaper Al-Ahram in which he
wrote, “China and Egypt are both ancient civilizations, with friendly
exchanges between their peoples extending far into the past.”55 In
May 2018, during a speech at a cultural reception, Chinese Ambas-
sador to Greece Zou Xiaoli praised Greece as an “ancient European
civilization with a long history and a magnificent culture.”56 In 2017,
China was one of the founding members of the “Ancient Civilizations
Forum” alongside Bolivia, Egypt, Greece, Iran, Iraq, Italy, and Peru,
with the aim of using the forum as a platform for dialogue and cultural
cooperation.57
Furthermore, despite Chinese affinity for Jewish values and cul-
ture, anti-Semitism exists in China. According to a 2014 poll by the
Anti-Defamation League, 20 percent of adults in China harbor anti-
Semitic views. In terms of specific questions, 41 percent of respondents
answered “probably true” to the assertion that “Jews are more loyal to
54 Chen Xiaochen and Sun Wenzu [陈晓晨，孙文竹], “China’s Special Envoy on the Middle
East Issue Wu Sike: the Middle East’s ‘Persuader’” [中国中东问题特使吴思科－中东
“劝架人”], China Business News [第一财经日报], April 27, 2010.
55 Xi Jinping [习近平], “Let the Friendship Between China and the Arabs Surge Forward
like the Nile” [让中阿友谊如尼罗河水奔涌向前], Beijing: Ministry of Foreign Affairs of
the People’s Republic of China [中华人民共和国外交部], January 20, 2016.
56 Zou Xiaoli, “Thank You, Hellas!” Embassy of the People’s Republic of China in the Hel-
lenic Republic, May 22, 2018
57 Ministry of Foreign Affairs of the People’s Republic of China [中华人民共和国外交部],
“Athens Declaration on the Establishment of the ‘Ancient Civilizations Forum’” [关于建立
“文明古国论坛” 的雅典宣言], April 28, 2017.
Israel than to [this country/to the countries they live in],” while 42 per-
cent of respondents answered the same to the assertion that “Jews think
they are better than other people.” At the lower end of the spectrum,
15 percent responded “probably true” to the assertion that “Jews have
too much control over the United States government,” while 18 percent
responded the same to the assertion that “Jews are responsible for most
of the world’s wars.”58
In addition, despite official Chinese rhetoric stressing respect for
and admiration of Israel for its various achievements, which have helped
propel bilateral ties, there have been times when Chinese officials have
taken a harder line, especially with regard to Israel’s policies toward the
Palestinians. In 2001, Zhang Qiyue, the spokesperson of the Chinese
Foreign Ministry, criticized Israel’s forcible seizure of Orient House,
the headquarters of Palestinian representatives in East Jerusalem, and
argued that such an action exacerbated the already tense regional situ-
ation.59 In 2006, Wang Guangya, the Chinese Permanent Representa-
tive to the UN, condemned an “Israeli attack on [a] UN observer posi-
tion in Lebanon that killed four UN observers.”60 In 2010, in response
to Israel’s raid on an aid flotilla to Gaza, Chinese Foreign Ministry
spokesman Ma Zhaoxu issued a statement expressing shock over the
attack and condemning it.61 As discussed earlier and illustrated fur-
58 Anti-Defamation League, “The ADL Global 100: China,” webpage, 2014.

59 Ministry of Foreign Affairs of the People’s Republic of China [中华人民共和国外交部],
“Foreign Ministry Spokesperson Zhang Qiyue Speaks on Israel’s Forcible Seizure and Shut-
ting of ‘Orient House,’ Site of Palestinian Representative Organization in East Jerusalem”
[ 外交部发言人章启月就以色列强行占领并关闭巴勒斯坦驻东耶路撒冷代表机构驻地
“东方大夏”发表谈话], August 14, 2001.
60 “China Condemns Israeli Attack on UN Observer Post in Lebanon,” Xinhua, July 27,
2006.
61 “China Condemns Israel’s Attack on Gaza Aid Flotilla,” China Radio International Eng-
lish, May 31, 2010.
ther in Chapter Four, Chinese statements in the UN have consistently

espoused anti-Israeli positions.
Outside of government, too, there have been criticisms of Israel
in various media. In April 2002, a deeply critical piece appeared in the
Life Times that was reposted on the website of the People’s Daily. The
author of the piece argued that
Israel has not only occupied several times what Palestine has in
land, but in terms of water resources, Israel has 2 billion cubic
meters, while Palestine only has 232 million cubic meters . . . .
[S]o long as Israel does not cease its occupation and oppression of
Palestine, the people of Palestine will never cease to resist.62
In August 2018, the Xinhua-owned Global Journal published an

article on the recently passed “Jewish nation-state law.” The article,
citing analysts, argued that the passage of the law was a clear indication
that the influence of populist movements in Europe and other regions
had led to a rise in the influence of extreme nationalists within the
Israeli government and a “rightward shift” for the Israeli government
as a whole.63 A May 2018 story by China Central Television (CCTV)
reporting on protests against the shifting of the U.S. embassy to Jeru-
salem stated that, “During the thirty years [following 1917] of British
‘mandatory rule,’ Jerusalem underwent major upheaval. Large num-
bers of Jewish people flooded into Palestine, squeezing the living space
of the original primary inhabitants, the Arabs.”64 Chinese academics
often use the terms forcible seizure (强占) or grabbing (抢占) instead of
62
Peng Hui [彭慧], “The Middle East Conflict: An Inextricable Dead Knot”
[中东冲突――解不开的死结], Life Times [生活时报], April 2, 2002.
63
“Israel’s Passage of ‘Jewish Nation-State’ Law Causes Controversy” [以色列通过
“犹太民族国家” 法案引争议], Global Journal [环球杂志], August 16, 2018.
64 “Palestinian,
Syrian Crowds on the Streets, Protest Moving of U.S. Embassy in Israel
to Jerusalem” [巴叙民众上街抗议美驻以使馆迁往耶路撒冷], China Central Television,
May 14, 2018.
the somewhat more neutral term of occupation (占领) when discussing

the land issue between the Israelis and the Palestinians.65
Furthermore, the generally positive official view of Israel does
not appear to be shared among the Chinese public. For example, in
multiple polls conducted for the BBC World Service that gauge global
public opinion as to whether various countries have a mainly positive
or mainly negative influence in the world, surveyed members of the
Chinese public consistently hold negative opinions of Israel (Table 3.1).
Available reports show that, in 2006, the percentage of the Chinese
public that held a mainly positive view of Israel’s influence was just
15 percent, in contrast to the 57 percent that held a mainly negative
view. Positive views of Israel reached their high point in 2013, when
32 percent of the Chinese public held a positive view of Israel’s influ-
ence against 33 percent with a mainly negative view. However, in the
most recent poll, taken in 2017, while positive views stood at 34 per-
cent, negative views worsened, climbing back to 57 percent. The Chi-
nese general public has never held a majority or even plurality positive
view of Israel.
Conclusion
Overall, Chinese leaders at an official level generally express positive

views of Israel. However, this approach is somewhat more nuanced in
practice, as indicated by the fact that Chinese diplomatic representa-
tives do not hesitate to criticize Israeli actions. Chinese official media at
times use critical language vis-à-vis Israel, and academics invariably do
65 Wang Nan [王楠], “Analyzing the Israel Factor in Palestine’s Economic Development”
[巴勒斯坦经济发展中的以色列因素分析], Arab World Studies [阿拉伯世界研究], No. 3,
May 2008; and Li Rongjian [李荣建], “The Causes of and Developments in the Conflict
Between Syria and Israel” [叙利亚与以色列冲突的由来和发展], Wuhan University Journal
(Philosophy & Social Sciences) [武汉大学学报(哲学社会科学版)], Vol. 57, No. 5, September
2004.
Table 3.1
Chinese Public Opinion of Israel’s Influence, 2006–2017
Mainly Positive Mainly Negative

Year (%) (%)
2006 15 57
2007 23 49
2010 22 40
2011 32 48
2012 23 45
2013 32 33
2014 13 49
2017 34 57
SOURCES: “Israel and Iran Share Most Negative Ratings in Global Poll,” BBC
World Service, March 6, 2007; “Global Views of USA Improve,” BBC World Service,
April 2008; “Global Views of United States Improve While Other Countries
Decline,” BBC World Service, April 18, 2010; “Positive Views of Brazil on the Rise in
2011 BBC Country Rating Poll,” BBC World Service, March 7, 2011; “Views of Europe
Slide Sharply in Global Poll, While Views of China Improve,” BBC World Service,
May 10, 2012; “Views of China and India Slide While UK’s Ratings Climb: Global
Poll,” BBC World Service, May 22, 2013; “Negative Views of Russia on the Rise:
Global Poll,” BBC World Service, June 3, 2014; “Sharp Drop in World Views of U.S.,
UK: Global Poll,” BBC World Service, July 4, 2017.
so. The general Chinese public also consistently expresses highly nega-
tive opinions about Israel.
This gap between official discourse and actual sentiment suggests
that China has adopted a keenly pragmatic approach to its relations
with Israel, rooted first and foremost in economic development with a
focus on innovation and high-technology joint ventures. Israel’s loca-
tion makes it a potential important node in BRI transportation net-
works linking the rest of the Middle East and Europe. Israel’s stable
political, economic, and social order and advanced technological base
offer a relatively safe environment from which China can operate and
promote its soft power image.
Given the historically close alliance between Israel and the United
States and China’s solidarity with the Palestinian cause and close rela-
tionship with Iran, there are limitations to a China-Israel partnership.
However, China clearly sees Israel’s accomplishments in innovation,
cybersecurity, bioagriculture, green technology, and CT as areas ripe
for cooperation and has chosen to promote positive relations with Israel
that will be viewed as politically neutral in the eyes of the region.
CHAPTER FOUR
Measuring Israel-China Relations
China and Israel have growing diplomatic and political, economic,

defense, education, and cultural ties. In this chapter, we draw on a
wide range of sources to provide a qualitative and quantitative over-
view of these ties since 1992, the year the countries established formal
diplomatic relations (see Appendix A for more detail on data collec-
tion and methods). The first two sections put this information within
the broader regional context by comparing China’s relations with Iran
and Saudi Arabia as well as Israel’s relations with India, the Philip-
pines, Taiwan, and Vietnam. Iran and Saudi Arabia both have strong
economic relations with China and are China’s main partners in the
Middle East. Furthermore, they have had historically difficult relations
with Israel and with each other, although ties between Israel and Saudi
Arabia are improving, while Israel and Iran have escalated tensions in
Syria.1 India has long been one of China’s major rivals in Asia and has
a growing defense relationship with Israel. We include the Philippines,
Taiwan, and Vietnam because, like India, they have either territorial
disputes or an adversarial relationship with China.
1 See for example, Kersten Knipp, “Israel and Saudi Arabia: New Best Friends in the
Middle East?” Deutsche Welle, November 28, 2017; and Courtney Kube, “Israel Seems to
Be Preparing for War with Iran, U.S. Officials Say,” NBC News, May 1, 2018.
47
Diplomatic Relations
One measure of the strength of political relations between two coun-

tries is the frequency of high-level visits by leaders to each country.2 By
this measure, Israel-China political relations have stayed relatively con-
stant from 1992 to 2018, whereas China-Iran and China–Saudi Arabia
relations have strengthened.
By high-level visits, we mean visits by individuals at the top of
each country’s political, foreign-policy, and military decisionmaking
hierarchies. For China, these include the president of the PRC; the vice
president of the PRC; the premier of the State Council; other members
of the Communist Party’s Politburo Standing Committee (PBSC); the
foreign minister; the state councilor responsible for foreign affairs, who
usually has greater authority than the foreign minister; the defense
minister and active-duty vice chairmen of the Central Military Com-
mission (CMC); and other members of the CMC.3 For Israel, Saudi
Arabia, and Iran, the counterparts to these individuals are the head of
state; the leader-in-waiting, such as the crown prince or deputy crown
prince of Saudi Arabia; the head of government; the foreign minister;
the defense minister; and the chief of staff of the defense forces.
During the period from 1992 to 2018, senior Chinese leaders
made a total of 13 visits to Israel, 26 to Saudi Arabia, and 14 to Iran
(Figure 4.1). For Israel, a plurality of these visits was at the level of
foreign minister, with five visits from 1992 to 2013. By contrast, only
one visit was at the level of head of state: then-President Jiang Zem-
in’s visit in 2000. The second-most-senior visit was by Vice President
Wang in October 2018. For Saudi Arabia, the highest number of visits
2 Although this measure is imperfect, it has proved useful in capturing the extent of the
PRC’s diplomatic ties, not only with Israel but also with several other countries, as shown in
Scobell et al., 2018.
3 Future analyses could include the Chairman of the National People’s Congress, one of the
highest-ranked officials in the Chinese Communist Party.
Measuring Israel-China Relations 49
Figure 4.1
High-Level Chinese Visits Under Each Chinese Leader, 1992–2018
16
Iran
Number of high-level visits
14
Saudi Arabia
12 Israel
10
8
6
4
2
0
Jiang Zemin Hu Jintao Xi Jinping
(1990–2003) (2003–2012) (2012–present)
Leader and corresponding tenure
SOURCES: Data are from the Ministry of Foreign Affairs of the PRC website; websites
of various Chinese diplomatic missions; and such official Chinese news sources as
Xinhua, People’s Daily, and CCTV.
was at the head-of-state level, with five in all. For Iran, the highest
number of visits—four—was at the foreign-minister level. It is worth
noting, however, that Iran received three visits from successive Chinese
presidents (heads of state), including Hu Jintao when he was still vice
president and leader-in-waiting, as well as three separate visits by other
members of the PBSC. In terms of the number and level of prestige of
visits, China has prioritized Saudi Arabia and Iran over Israel, although
the 2018 visit by Wang could indicate a growing emphasis on Israel.
Since President Xi took office in 2012, ties between China and Iran
have grown, and in 2016, Xi visited Tehran, marking the first visit to
Iran by a Chinese president in 14 years.4 On this visit, Xi met with
4 For a more detailed discussion of China and Iran, see Scott W. Harold and Alireza Nader,
China and Iran: Economic, Political, and Military Relations, Santa Monica, Calif.: RAND
Supreme Leader Ali Khamenei and Iranian President Hassan Rouhani

and signed 17 multi-billion-dollar agreements as part of the BRI.5 At
the same time, Chinese leaders have been careful to maintain a sem-
blance of balance between Saudi Arabia and Iran. Indeed, on the same
trip to Tehran, Xi made sure to visit both countries to demonstrate
China’s balanced approach to the region.6 On this trip, Xi visited other
Middle Eastern countries but skipped Israel.
This record contrasts with the number of high-level visits made
by leaders of Israel, Saudi Arabia, and Iran to China (Figure 4.2). From
1992 to 2018, senior Israeli leaders made 19 visits to China—six at the
level of foreign minister and five each at the head-of-state and head-
of-government levels. During the same period, Iranian senior leaders
made 15 visits to China, seven of which were by the head of govern-
ment (the president of Iran) and another seven by the foreign minister.
Saudi leaders had the least number of visits—seven in all, with two
each by the king, the crown prince, and the foreign minister, and one
joint visit by the deputy crown prince and the foreign minister.
Another measure employed to gauge China’s diplomatic relations
with Israel is its voting record at the UN Security Council on resolu-
tions critical of Israel. From 1992 to 2016, the year of the most recent
resolution, China has consistently voted in favor of resolutions criticiz-
ing Israel (Table 4.1). What should be noted, however, is that in all of
these resolutions—except for in 1994, when the resolution was adopted
without vote—China has always voted with the majority of member
states and is in that sense not an outlier. Netanyahu reportedly asked
Corporation, OP-351-CMEPP, 2012; and John W. Garver, China and Iran: Ancient Partners
in a Post-Imperial World, Seattle, Wash.: University of Washington Press, 2006.
5 Charlotte Gao, “Iran Protests: What’s China’s Stance?” The Diplomat, January 3, 2018.
6 Huo Xiaoguang, Hao Weiwei, and Qian Tong [霍小光，郝薇薇，钱彤], “Toward a
New Journey of Common Development: Overview of President Xi Jinping’s Visits to Saudi
Arabia, Egypt, and Iran” [迈向共同发展新征程－－国家主席习近平访问沙特，埃及，
伊朗综述], People’s Daily [人民网], January 25, 2016.
Figure 4.2
High-Level Visits to China Under Each Chinese Leader, 1992–2018
10
9 Iran
Number of high-level visits
8 Saudi Arabia
7 Israel
6
5
4
3
2
1
0
(1990–2003) (2003–2012) (2012–present)
of various Chinese diplomatic missions; and additional news sources, such as BBC,
Reuters, and Al Arabiya.
Beijing to change its voting patterns in such international forums as

the UN, but such a shift has not yet happened and, according to offi-
cials with the Israeli Ministry of Foreign Affairs, might not happen in
the foreseeable future given China’s competing interests in the Middle
East.7
Defense Relations
As reflected by the changes in Israel’s behavior following the

PHALCON and HARPY incidents and by the fact that Israel relies on
7 Raphael Ahren and Yifeng Zhou, “Netanyahu to Times of Israel Chinese: I Hope Bei-
jing’s ‘Superb’ Relations with Israel Will Affect Its UN Votes,” Times of Israel, March 23,
2017; discussion with an official at Israel’s Ministry of Foreign Affairs, Jerusalem, July 2017.
Table 4.1
52
Chinese Support for UN Security Council Resolutions on Israel, 1992–2016
The Evolving Israel-China Relationship

Title Symbol Year Note
[Resolution] on the deportation by Israel of 12 Palestinian civilians S/RES/726(1992) 1992
from the territories occupied by Israel.
[Resolution] on the deportation of Palestinian civilians from S/RES/799(1992) 1992
territories occupied by Israel.
[Resolution] on measures to guarantee the safety and protection of S/RES/904(1994) 1994 Adopted without
the Palestinian civilians in territories occupied by Israel. vote
[Resolution] on events in Jerusalem and other areas throughout S/RES/1322(2000) 2000 United States
the territories occupied by Israel. abstained
[Resolution] on cessation of all acts of violence in the territories S/RES/1402(2002) 2002 Syria non-voting
occupied by Israel and resumption of the peace process.
[Resolution] on cessation of all acts of violence and withdrawal of S/RES/1435(2002) 2002 United States
Israeli forces from Palestinian cities. abstained
[Resolution] on the humanitarian situation of Palestinians made S/RES/1544(2004) 2004 United States
homeless in the Rafah refugee camp and respect by Israel of its abstained
obligations under international humanitarian law.
[Resolution] on a durable and fully respected ceasefire and the full S/RES/1860(2009) 2009 United States
withdrawal of Israeli forces from the Gaza Strip. abstained
[Resolution] on cessation of Israeli settlement activities in the S/RES/2334(2016) 2016 United States
Occupied Palestinian Territory, including East Jerusalem. abstained
SOURCE: United Nations Bibliographic Information System, “Voting Record Search,” Dag Hammarskjöld Library,
United Nations, accessed September 27, 2018.
the United States for military supplies, Israel and China generally do
not have a strong defense relationship, in contrast to China’s defense
relations with Iran and Saudi Arabia. We investigated the evolution
of defense relations from 1992 to 2016 using a variety of measures,
including high-level defense exchanges, such as visits by senior military
personnel; joint exercises between China and Israel, Iran, and Saudi
Arabia; and arms transfers using data from the Stockholm Interna-
tional Peace Research Institute (SIPRI), which measures such transfers
globally in a common unit that the institute calls the “trend-indicator
value” (TIV).8
We place the defense relationships into a comparative perspective
by looking at arms transfers from China and Israel to third parties that
the other country might potentially find upsetting. These include Chi-
nese exchanges and arms transfers to Iran and Saudi Arabia (but also
to other major countries in the region where relevant, such as Egypt,
Qatar, Syria, and Turkey), and Israeli arms transfers to India, the Phil-
ippines, Taiwan, and Vietnam.
It is important to note that the SIPRI data we partially rely on
in this chapter could undercount important aspects of China’s defense
relationship with actors in the Middle East, including with Israel’s
adversaries. In some cases, this might not be a factor in assessing the
relationship. For example, Israel and Saudi Arabia have developed
back-channel ties and no longer see each other as enemies, so even
if they are underreported, Chinese-Saudi relations should be less of a
concern to Israel.9
However, the same cannot be said about Chinese-Iranian defense
relations, especially given escalating Israeli-Iranian tensions in Syria.10
As Yitzhak Shichor has noted, China consistently has been accused
8 SIPRI, “SIPRI Arms Transfers Database,” database, undated(a).

9 Knipp, 2017.
10 Kube, 2018.
of supporting Iran’s nuclear program and of supplying missiles and

nonconventional weapons to Iran.11 Although our analysis begins in
the 1990s, after the establishment of formal Israeli-Chinese diplo-
matic ties, Iranian-Chinese military ties have been strong since the
1980s. China helped Iran boost its anti-access/area denial capabilities
by selling it tactical ballistic and anti-ship cruise missiles, such as the
HY-2 “Silkworm”; advanced anti-ship mines; and Houdong fast-attack
boats. China also provided technical expertise to Iran by helping to
develop the indigenous Nasr anti-ship cruise missile.12 However, as our
data show, Chinese military exports to Iran slowed down substantially
because of international sanctions on Tehran. However, the fact that
“Chinese design and technology can be seen in many Iranian missile
series, from the short-range Oghab and Nazeat missiles to the long-
range Shahab 3,” remains a problem from the Israeli perspective.13 In
addition, even as sales slowed from 2013 to 2015, the two countries
deepened some of their defense ties. In 2014, in the first-ever visit of
an Iranian Navy chief to China, the two countries discussed possible
cooperation on anti-piracy and humanitarian assistance and disaster
relief operations. During the same year, the Chinese and Iranian navies
for the first time held a joint naval drill in the Persian Gulf.14 And in
October 2015, Admiral Sun Jianguo, the deputy chief of staff of the
PLA Navy, met with Iranian Defense Minister Hossein Dehgan to lay
the foundation for deeper military cooperation.15
11 Yitzhak Shichor, “China’s Upsurge; Implications for the Middle East,” Israel Affairs,
Vol. 12, No. 4, November 28, 2006.
12
Joel Wuthnow, “China-Iran Military Relations at a Crossroads,” China Brief, Vol. 15,
No. 3, February 4, 2015.
13 Harold and Nader, 2012.
14 Ankit Panda, “China and Iran’s Historic Naval Exercise,” The Diplomat, September 23,
2014.
15
Franz-Stefan Gady, “Iran, China Sign Military Cooperation Agreement,” The Diplomat,
November 15, 2016.
China also is thought to have had military nuclear cooperation

with such countries as Algeria, Syria, and Iraq.16 China might also indi-
rectly supply weapons, such as artillery rockets, to such groups as Hez-
bollah and Hamas.17 The SIPRI database does not cover such transfers,
which is a notable shortcoming, as we discuss further in Appendix A.18
Nevertheless, the data that SIPRI does provide still serve as a useful
shorthand to gauge at least one aspect of how official defense relations
between China and Israel and between China and other countries have
evolved over time.
High-Level Defense Exchanges

Top-level defense exchanges between China, Israel, Iran, and Saudi
Arabia have been less frequent than top-level civilian visits, which we
discussed previously. From 1992 to 2018, there was only one such visit
to Iran (out of 14 total visits), three to Saudi Arabia (out of 26 total),
and four to Israel (out of 13 total) by top Chinese defense officials (see
Figure 4.3).
Visits by top-level defense officials from Israel, Iran, and Saudi
Arabia accounted for an even smaller proportion of total visits to China
during this period. From 1992 to 2018, just three out of a total of 19
visits by senior Israeli leaders to China were by either the minister of
defense or the chief of the general staff. For Iran, only two out of 15
high-level visits were by the minister of defense, while for Saudi Arabia,
it was just one of out of seven visits (see Figure 4.4).
However, these numbers alone do not tell the full story of the
extent and depth of defense ties between China and Israel, Iran, and
16 Shichor, 2006.
17 Yiftah S. Shapir, “Hamas’ Weapons,” Strategic Assessment, Vol. 11, No. 4, February 2009.
18 As we discuss in Appendix A, the SIPRI data are limited as they count only major con-
ventional weapons and thus do not account for transfers of nuclear-related technologies or
knowhow to Iran and other countries, or the indirect exports of weapons and ammunition
to Hezbollah and Hamas.
Figure 4.3
Top-Level Defense Visits to the Middle East Under Each Chinese Leader,
1992–2018
2.5
Iran
2.0 Saudi Arabia
Number of top-level
Israel
defense visits
1.5
1.0
0.5
0
(1990–2003) (2003–2012) (2012–present)
of various Chinese diplomatic missions; and such official Chinese news sources as
Xinhua, People’s Daily, and CCTV.
Saudi Arabia. Defense exchanges between these countries are not lim-
ited to the top level of command, and in recent years, there have been
several visits at lower levels. For example, in 2010, for the first time
after the HARPY incident, a delegation of Chinese military officials
visited Israel and senior Israel Defense Forces (IDF) officers, such as
then–Navy Chief Eliezer Marom, visited China.19 The visit resulted
in an agreement to provide training for PLA officers from the spokes-
person’s unit at IDF spokesperson facilities.20 In 2011, the PLA’s chief
19 “China Pledges to Enhance Bilateral Ties, Military Links with Israel,” Xinhua, Decem-
ber 13, 2010; “Friends Again, Israel and China Boost Ties,” UPI, October 2, 2012; Hiddai
Segev, “Sino-Israeli Security Relations: In America’s Shadow,” Middle East Institute, May 15,
2018.
20 Lior Averbach, “Dover Tzahal Yeshatef Peula Im Yehidat Ha’Dovrut Shel Tzva Sin”
[“IDF Spokesperson Will Collaborate with the Spokesperson Unit of China’s Military”],
Figure 4.4
Top-Level Defense Visits to China Under Each Chinese Leader, 1992–2018
2.5
Iran
2.0 Saudi Arabia
Number of top-level
Israel
defense visits
1.5
1.0
0.5
0
(1990–2003) (2003–2012) (2012–present)
of various Chinese diplomatic missions; and additional news sources, such as BBC,
Reuters, and Al Arabiya.
of staff, General Chen Bingde, visited Israel to “deepen understand-

ing, enhance friendships, expand consensus and promote cooperation”
between the two countries.21 Reportedly, in May 2013 “Israeli Head of
Military Intelligence, Major General Aviv Kochavi, headed to China
secretly to meet his counterpart, Major General Chen Youyi, along
with other Chinese intelligence officials.”22 In addition, these data do
not reflect frequent visits by former Israeli defense officials to China.
Globes, October 25, 2010; Segev, 2018; Josef Federman and Christopher Bodeen, “China–
Israel Ties Alarm Human Rights Advocates,” Washington Times, May 29, 2012.
21 Dan Williams, “Chinese Military Chief Makes First Visit to Israel,” Reuters, August 14,
2011.
22 Segev, 2018.
For Iran, in addition to the previously mentioned 2015 visit by

Admiral Sun Jianguo, Rear Admiral Habibollah Sayyari, commander
of the Islamic Republic of Iran Navy (IRIN), visited Beijing on the
invitation of PLA Navy Commander Wu Shengli in October 2014.23
More recently, a delegation of 16 senior officers from the Chinese
Ground Force, Navy, and Air Force visited Tehran and held talks with
the commander of the Iranian Army Ground Force, Brigadier General
Kiomars Heidari.24 In the case of Saudi Arabia, in October 2015, Wu
Shengli received a visit from the commander of the Saudi Navy, Abdul-
lah bin Sultan.25
Chinese military exchanges with the rest of the region also have
been growing in different forms and with different countries. Such
exchanges include high-level visits and port visits. In terms of high-
level visits, Admiral Wu Shengli visited Egypt in 2016 on the invi-
tation of his counterpart and held talks with the Egyptian Minister
of Defense Sedki Sobhy and Navy Commander Vice Admiral Osama
Mounir Rabie.26 In the same year, reportedly, Guan Youfei, director of
the Office for International Military Cooperation of China’s CMC,
met Syrian Defence Minister Fahad Jassim al-Freij in Damascus.27 For
port visits, recent examples include a visit by a Chinese naval fleet in
January 2017, “the second time for Chinese naval ships to pay an offi-
23 “Iran’s Navy Commander Visits China,” China Military, October 21, 2014.

24 “Iranian Army Commander, Chinese Military Delegation Meet in Tehran,” China Mili-
tary, July 4, 2018.
25 Chen Guoquan and Mo Xiaoliang [陈国全，莫小亮], “Wu Shengli Meets Saudi Navy
Commander” [吴胜利会见沙特海军司令], Ministry of National Defense of the People’s
Republic of China [中华人民共和国国防部], October 16, 2015.
26 “Chinese
Navy Commander Wu Shengli Visits Egypt” [中国海军司令员吴胜利访问埃及],
Xinhua [新华], May 14, 2016.
27 Ben Blanchard, “China Says Seeks Closer Military Ties with Syria,” Reuters, August 16,
2016.
cial visit to Saudi Arabia.”28 This was followed a few weeks later by the
24th Chinese Naval Escort Taskforce’s visit to Qatar, “the PLA Navy’s
second visit to Qatar.”29 In June of the same year, a Chinese naval fleet
made a port visit to Iran, docking at the Bandar Abbas Port.30 In 2015,
a Chinese naval fleet made a port visit to Turkey, the third time for
Chinese naval ships to do so.31
Arms Transfers
The SIPRI Arms Transfer Database registers no data on Chinese arms
transfers to Israel (Figure 4.5). However, given the advanced technol-
ogies available to Israel, and given its security relationship with the
United States, it is unlikely that it would import arms from China. For
Saudi Arabia, data are available only for three years, and for Iran, data
are available from 1992 to 2015. Chinese arms transfers to Iran peaked
in 1996 at 320 million TIVs and, with some variation, have consis-
tently declined since then, reaching a low of 9 million TIVs for three
consecutive years from 2013 to 2015, during the peak of international
sanctions. Chinese arms transfers to Saudi Arabia also appear to have
declined in value, from 33 million TIVs in 2008 and 2009 to 14 mil-
lion TIVs in 2015. By comparison, Saudi Arabia’s greatest source of
arms transfers remains the United States, with a value of 1,771 million
TIVs in 2015. Iran, meanwhile, might get most of its arms from either
China or Russia: In 2015, the value of Russian arms transfers to Iran
was 4 million TIVs, but in 2016, the value was 374 million TIVs. Data
are unavailable for 2016 for China.
28 Li Jiayao, “Chinese Naval Fleet Arrives in Saudi Arabia for Goodwill Visit,” China Mili-
tary, January 8, 2017.
29 Yao Jianing, “24th Chinese Naval Escort Taskforce Visits Qatar,” China Military, Janu-
ary 23, 2017a.
30 Yao Jianing, “Chinese Naval Fleet Visits Iran,” China Military, June 16, 2017b.
31
“Chinese Navy Ships Visit Turkey for the Third Time” [中国海军舰艇第三次访问土耳其],
Phoenix News [凤凰新闻], May 24, 2015.
Figure 4.5
Arms Exports from China, 1992–2015
350
SIPRI trend indicator values (TIVs),
Iran
300 Saudi Arabia
250
millions
200
150
100
50
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: Data are from SIPRI, undated(a).
Gaps also exist in the data on Israeli arms transfers to China,

India, the Philippines, Taiwan, and Vietnam (Figure 4.6). For China,
there are data only from 1992 to 2001; according to experts, there were
no arms transfers after 2001, so this is not a flaw in the data.32 For
India, data are available from 1997 onward. Data are available for only
three years for the Philippines, four years for Taiwan (ending in 1992,
when Israel normalized diplomatic relations with the PRC), and eight
years for Vietnam. Nevertheless, based on the data available, it appears
that arms transfers to India have been growing the most rapidly. They
reached a high point in 2005 at 247 million TIVs, underwent a period
of decline before recovering again in 2015 and reaching 276 million
TIVs, and then more than doubled the following year to 599 million
32 Authors’ correspondence with an Israeli expert on China, December 2018.

Figure 4.6
Arms Exports from Israel to Various Countries in Asia, 1992–2016
700
SIPRI trend indicator values (TIVs),
China
600 India
Philippines
500 Vietnam
millions
400
300
200
100
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: Data are from SIPRI, undated(a).
TIVs. Arms transfers to Vietnam similarly experienced massive growth,

expanding more than nine times from just 7 million TIVs in 2015 to
68 million TIVs in 2016. However, the total value of arms transfers
to India dwarfs the total value of arms transfers to Vietnam during
the period from 1992 to 2016: 2,915 million TIVs versus 134 million
TIVs. Overall, however, both Vietnam and India continue to buy most
of their arms from Russia, which was the biggest arms supplier to both
countries in 2016. The value of Russian arms transfers to Vietnam that
year was 1,039 million TIVs, while the value for India was 1,590 mil-
lion TIVs.
Although the data might imply that both China and Israel do not
strongly link their defense relationships with other countries to their
relationship with each other, this is not the case with respect to at least
two countries. Part of Israel’s objection to closer relations with China
rests on its military connections with Iran, while China is dissatisfied

with Israel’s arms sales to India. In particular, China was upset in 2003
when Israel agreed to sell India PHALCON systems, which it denied
the PRC only three years earlier because of U.S. pressure.33 China also
was unhappy about Vietnam’s forward deployment of Israeli-sourced,
long-range artillery rockets on the Nansha Islands in 2016.34
Joint Exercises and Technology Transfers

Overall, China’s defense involvement in the Middle East has been lim-
ited but has been growing over the past decade. In September 2014, for
instance, China and Iran held their first joint military exercise between
the PLA Navy and the IRIN.35 This was followed by another joint
naval exercise between the two countries in 2017.36 In 2016, “special
forces from China and Saudi Arabia . . . held their first joint anti-
terrorism drills.”37 To date, however, China and Israel do not appear
to have conducted any joint exercises together. The Hong Kong–based
Phoenix News, citing a report in Asharq Al-Awsat, reported in 2012 that
China and Israel were to conduct their first ever joint exercises.38 How-
ever, there was no further reporting from other sources—including
the Chinese Ministry of Defense—to corroborate this story. In 2016,
33 “U.S. Approves Israeli Phalcon Sale to India,” Press Trust of India, May 22, 2003; authors’
correspondence with an Israeli expert on China, September 2018.
34 Mo Jingxi and Chen Weihua, “China Faults Vietnam on Islands,” China Daily USA,
August 11, 2016.
35
Yao Jianing, “First China-Iran Joint Military Exercise Attracts Attention,” Ministry of
National Defense of the People’s Republic of China, September 23, 2014.
36 Babak Dehghanpisheh, “Iran and China Conduct Naval Drill in Gulf,” Reuters, June 18,
2017.
37
Michael Martina, “China Holds First Anti-Terror Drills with Saudi Arabia,” Reuters,
October 27, 2016.
38
“Foreign Media Claims China and Israel to Hold First Ever Joint Exercises”
[外媒称中国与以色列将举行首次联合军演], Phoenix News [凤凰新闻], August 17, 2012.
in a notable first public cooperation between an Israeli defense con-

tractor and the Chinese government since the HARPY incident, Israel
Aerospace Industries formed a joint venture to cooperate with Lingyun
(Yichang) Science and Technology Group Co., Ltd., to establish its
first local civilian Chinese maintenance, repair, and overhaul (MRO)
enterprise, in the Hubei Province.39
Beyond Israel, Iran, and Saudi Arabia, China has begun con-
ducting exercises with other countries in the region. In 2010, “the
air forces of China and Turkey . . . carried out a joint exercise . . . in
what appeared to be the first such drill involving Beijing and a [North
Atlantic Treaty Organization] member country.”40 In 2015, Chinese
and Egyptian naval forces conducted a joint maritime drill in the Med-
iterranean at the end of a port visit to Alexandria by the Chinese forc-
es.41 In 2017, a Chinese naval task force made a port visit to Oman, at
the conclusion of which it conducted a joint exercise with the Oman
navy in the Gulf of Aden.42
China’s presence in the region also has grown in other ways.
Beginning in December 2008, the PLA Navy began to carry out escort
missions in the Gulf of Aden and around the Horn of Africa under
a UN Security Council mandate and, as of July 2017, “it [had] dis-
patched 26 task force groups, escorted 6,400 Chinese and foreign ves-
39 Israel Aerospace Industries, “IAI Deepens Its Ties in China’s Civil Aviation Market: IAI
to Cooperate with Chinese Lingyun (Yichang) Science and Technology Group Co. Ltd on
Establishing a Local MRO Enterprise in the Hubei Province,” press release, January 12,
2016.
40 Jim Wolf, “China Mounts Air Exercise with Turkey, U.S. Says,” Reuters, October 8,
2010.
41
Zhang Tao, “Chinese, Egyptian Navies Conduct Joint Maritime Drill in Mediterranean,”
Ministry of National Defense of the People’s Republic of China, September 9, 2015.
42 Yan Guiwang and Mei Yunlong [严贵旺，梅云龙], “China-Oman Navies Hold Joint
Maritime Exercise” [中阿海军举行海上联合演习], Ministry of National Defense of the
People’s Republic of China [中华人民共和国国防部], June 22, 2017.
sels and warned away more than 3,000 suspected pirate ships.”43 China
also dispatched PLA Navy ships to evacuate Chinese nationals from
Libya in 2011 and both Chinese nationals and foreigners from Yemen
in 2015.44 Most notably, in August 2017, China opened in Djibouti its
first overseas military base.45 In March 2017, during a visit to China by
Crown Prince Mohammed bin Salman of Saudi Arabia, the two sides
signed an agreement to “set up the first factory for Chinese hunter-
killer aerial drones in the Middle East.”46 The Annual Report to Con-
gress: Military and Security Developments Involving the People’s Republic
of China 2018 also noted that
China has sold armed UAVs to . . . Iraq, Saudi Arabia, Egypt, and
the United Arab Emirates. China faces little competition . . . as
most countries who produce them are restricted in selling the
technology as signatories of the Missile Technology Control
Regime and/or the Wassenaar Arrangement on Export Controls
for Conventional Arms and Dual-Use Goods and Technologies.47
China’s defense relationships and activities throughout the Middle

East continue to grow in terms of the range of countries and activities,
43 “China to Continue Escort Missions in Gulf of Aden, Somalia,” Xinhua, October 27,

2017.
44 Gabe Collins and Andrew S. Erickson, “Implications of China’s Military Evacuation
of Citizens from Libya,” China Brief, Vol. 11, No. 4, March 11, 2011; BBC News, “Yemen
Crisis: China Evacuates Citizens and Foreigners from Aden,” April 3, 2015.
45
Ben Blanchard, “China Formally Opens First Overseas Military Base in Djibouti,”
Reuters, August 1, 2017.
46 MinnieChan, “Chinese Drone Factory in Saudi Arabia First in Middle East,” South
China Morning Post, March 26, 2017.
47 Office of the Secretary of Defense, Annual Report to Congress: Military and Security Devel-
opments Involving the People’s Republic of China 2018, Washington, D.C.: U.S. Department
of Defense, May 16, 2018, p. 23.
but despite regional rivalries, China has managed to maintain good

relations throughout the region.
Economic Relations
In contrast to defense or even political relations, economic relations

between Israel and China are booming. In this section, we discuss
trade patterns and look at data on patent applications and grants.
The latter are important in the Israel-China context because Israel is
a major producer of IP and because China not only is trying to shift
from investment-led to innovation-led growth, but also because patent-
ing in China has risen dramatically. Furthermore, the trade data cover
only goods trade, but trade in IP would be services trade. Services trade
data are of much poorer quality than goods trade data, so it is useful to
consider aspects of services trade, of which IP is one.
Trade
In evaluating the strength of trade ties between China and Israel, we
relied on two data sources, as we elaborate further in Appendix A:
(1) the China Statistical Yearbook Database (CSYD), and (2) the
United Nations Commodity Trade Statistics Database (UN Com-
trade), which gets its data from national statistical authorities.48 We
provide a more detailed discussion in Appendix B of the discrepancies
between China-origin data and Israel-origin data in UN Comtrade.
The value of trade between the two countries has grown steadily
since the 1990s (Figures 4.7 and 4.8). The exceptions were 2009, the
worst year of the global financial crisis, when there was a decline in
48
National Bureau of Statistics of China, “China Statistical Yearbooks Database,” database,
undated; UN Comtrade, “Read Me First (Disclaimer): Every User of UN Comtrade Should
Know the Coverage and Limitations of the Data,” webpage, undated(a); UN Comtrade,
“UN Comtrade Database,” homepage, undated(b).
Figure 4.7
China Exports to Israel, 1992–2016
10,000
9,000 Exports to Israel as reported by China
Imports from China as reported by Israel
8,000
7,000
$U.S. million
6,000
5,000
4,000
3,000
2,000
1,000
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: Data are from UN Comtrade, undated(b).

NOTES: UN Comtrade China exports are data as reported by China and are identical
to data in CSYD. UN Comtrade Israel imports are data as reported by Israel.
trade in both directions, and 2015, when China’s reported imports

from Israel fell, although Israel’s reported imports from China rose.
Trade returned to growth the following year in both cases. Chinese
reported exports to Israel were $8.2 billion in 2016 and (not shown
in graph) $8.9 billion in 2017. Israeli reported exports to China hit
$3.3 billion in 2016 and (not shown in graph) stayed at $3.3 billion
in 2017 (although China reported imports from Israel of $4.2 billion
that year).
There are several notable points about trade between Israel and
China. The most important is that trade in both directions has grown
dramatically. An additional point is that, as with much of the world,
China has a goods trade surplus with Israel. In numerous discussions
Figure 4.8
China Imports from Israel, 1992–2016
3,500
Imports from Israel as reported by China
3,000 Exports to China as reported by Israel
2,500
$U.S. million
2,000
1,500
1,000
500
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: Data are from UN Comtrade, undated(b).

NOTES: UN Comtrade China imports are data as reported by China and are identical
to data in CSYD. UN Comtrade Israel exports are data as reported by Israel.
with Israeli officials and businesspeople, we heard that most Israeli

exporters fail to penetrate the Chinese market.49 We cannot assess ser-
vices trade, in which Israel could have a surplus, because of lack of
data. However, data on patents, presented below, suggest that this is
the case.
Patents
Part of greater economic exchange between Israel and China is the IP
content of Israeli goods. Since the late 1990s, Israel appears to have been
49 Discussion with Israeli entrepreneurs operating in China, Los Angeles, California,

November 2018; discussion with Israeli Ministry of Foreign Affairs official, Santa Monica,
California, October 2018; and authors’ correspondence with an Israeli expert on China, Sep-
tember 2018.
moving toward protecting that IP through patenting in China. We

look at two related forms of patent data: patent applications and patent
grants. Not all patents that are applied for are granted (Figure 4.9).
The patent-based relationship between Israel and China has been
even more one-sided than that of goods trade. Although the number of
Israeli patent applications and grants in China has grown, the number
of Chinese patent applications and grants in Israel remained stagnant
from 1994 to 2015. Throughout this period, Chinese nationals filed an
average of 21 patent applications in Israel, in contrast to the average of
283 applications filed in China by Israelis. Moreover, after reaching a
high point of 61 applications in 2011, the number of Chinese patent
applications declined to 46 in 2015. Israeli patent applications have, in
contrast, grown steadily over the period from 1994 to 2015. The aver-
Figure 4.9
Chinese and Israeli Patents, 1992–2015
800
Israeli patent applications in China
Number of patent applications
700
Chinese patent applications in Israel
600 Israeli patent grants in China
Chinese patent grants in Israel
500
and grants
400
300
200
100
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Year
SOURCE: Data are from the World Intellectual Property Organization, “WIPO IP
Statistics Data Center,” webpage, accessed 2017.
age number of patents granted in China to Israelis during this period

was 106, while the number of patents granted in Israel to Chinese was
less than six.
Israel has been widely hailed for its innovation, which includes
patenting.50 China is trying to become more innovative and has
increased its patent applications globally. The lopsided nature of Israel-
China patenting activity suggests that Israel views China as a valuable
market to which to sell IP-related products and services, whereas China
views Israel as a valuable source of IP, rather than a market for Chinese
IP-related products and services.
Education and Cultural Relations
Education-related relations can have several effects on broader relations

between two countries. First, because much innovation starts in uni-
versities, higher education alliances can affect the pace and nature of
innovation and technology development in a country. Second, study-
ing abroad can increase familiarity and knowledge about the host
country, leading to stronger trade or diplomatic relations in the future.
Furthermore, universities or educational institutions tied to one coun-
try and operating in a second country can help spread the values of the
source country.
In gauging the educational ties between Israel and China, we
used several measures, including the number of Confucius Institutes
in Israel; the number of Israeli students in China and of Chinese stu-
dents in Israel; the number of academic programs and campuses that
Israel and China have in the other country; and the number of senior
academic exchanges and visits that have taken place between the two
countries. Israeli universities teach about China as part of Asian study
programs, but their focus on contemporary and policy-oriented aspects
50 Senor and Singer, 2009.

is rather limited, and since 2011, a growing number of Chinese univer-

sities have been offering Jewish, Israel, and Hebrew studies, including
Nanjing University, Henan University, and Shandong.51
Confucius Institutes
Confucius Institutes started in 2004 and are foreign cultural institu-
tions designed to promote Chinese language and culture.52 Data on
the number and locations of Confucius Institutes in Israel are available
on the website of Confucius Institute headquarters: www.hanban.org.
As of summer 2017, there were two Confucius Institutes in Israel, one
each at Tel Aviv University and the Hebrew University of Jerusalem. By
comparison, there were no Confucius Institutes in Saudi Arabia, but
there were two in Iran, both at the University of Tehran.
Exchange Students
In absolute numbers, there do not appear to be large flows of students
from China to Israel or Israel to China. There are no publicly avail-
able national data sources on the number of exchange students from
Israel and China in the other country. The main official source is the
United Nations Educational, Scientific and Cultural Organization
(UNESCO) Institute for Statistics (UIS), which reported 106 Chinese
51 For Israel university activity, see Anna Etra, “First Israel Studies Program in China to
Start This Fall,” Jerusalem Post, August 5, 2011. For Chinese university activity, a partial list
can be found at The Sino-Judaic Institute, “Jewish and Middle Eastern Studies Programs in
China,” webpage, 2009.
52 Confucius Institute Headquarters, “About Confucius Institutes,” webpage, 2014. Calling
China’s international cultural and educational outreach centers Confucius Institutes shows
how far the country has migrated from its revolutionary Maoist heritage (although some
believe that the rule of Xi is a step back in that direction). On November 29, 1966, during
the peak of the Cultural Revolution, the Red Guards destroyed Confucius’ grave in his
family cemetery and exhumed some of the bodies, setting off a period of grave plunder (Sang
Ye and Geremie R. Barmé, “The Fate of the Confucius Temple, the Kong Mansion and Kong
Cemetery” [孔庙、孔府、孔林], Commemorating Confucius in 1966–67, China Heritage
Quarterly, No. 20, December 2009).
students in Israel in 2014 but has no data on the number of Israeli

students in China.53 News reports supplement this data point. Accord-
ing to the online version of the Guangming Daily, an official newspa-
per run by the Chinese Communist Party (CCP) Central Committee,
there were more than 200 Chinese exchange students in Israel around
2014.54
That year, representatives of Israel’s universities traveled to China
to promote study opportunities for Chinese students in Israel and 350
scholarships became available annually to Chinese (and Indian) stu-
dents for undergraduate and graduate degrees and short-term summer
courses, in addition to 100 annual post-doctoral fellowships for all
areas of research.55 An additional program is joint research grants.56
This could explain the increase in Chinese students in Israel; accord-
ing to Chinese Ambassador to Israel Zhan Yongxin, as of late January
2016, there were approximately 1,000 Chinese exchange students in
Israel.57 In 2017, for instance, the University of Haifa alone reported
having some 200 Chinese students compared to 20 in 2013.58
Meanwhile, according to an article in the Jerusalem Post in
2016, “fewer than 100 Israeli students have made their way annually
53 UNESCO, “Global Flow of Tertiary-Level Students,” UNESCO Institute for Statistics,

2017.
54
Sun Tong [孙通], “Israel: The Promised Land of Chinese Exchange Students”
[以色列：中国留学生的应许之地], Guangming Daily [光明网], June 20, 2014.
55 Israeli Council for Higher Education, “Israel Promotes Study Opportunities for Chinese
Students,” webpage, October 20, 2014.
56
Israeli Council for Higher Education, “Academic Cooperation with China and India—
General Information,” webpage, undated.
57 Li Jingjing [李晶晶], “Chinese Exchange Students in Israel Hold Social Gathering,
Singing and Dancing to Celebrate Beginning of Spring” [在以中国留学生举办联欢会
载歌载舞庆新春], Times of Israel (Chinese edition) [以色列时报], January 24, 2016.
58
Sarah Levi, “Chinese Enrollment at Israeli Universities Skyrockets,” Jerusalem Post,
August 14, 2017.
to China to pursue academic studies.”59 However, we were unable to

obtain more-complete data extending further back in time, and infor-
mation about the number of exchange students that the two countries
send to the other is sporadic at best.
For comparison, UIS reports that there were 163 Chinese
exchange students in Iran and 875 in Saudi Arabia, but UIS reports
no data for the reverse. Again, this information is undated and these
numbers are all relatively small. According to the same source, Isra-
el’s top three destination countries for exchange students are Roma-
nia (2,619 students), the United States (2,153 students), and Moldova
(2,043 students). China’s top destination by far was the United States,
with 309,837 students. Australia was a distant second with 112,329
students, and the United Kingdom was third, with 89,318 students.
Other sources note that, around 2011, there were “approximately 1,100
Saudi students enrolled in different universities in several cities across
China . . . [and] 270 Chinese students enrolled in a number of [Saudi]
universities.”60
Academic Programs
Beyond study abroad programs, joint academic campuses are another
form of educational exchange. For this information, we relied primar-
ily on news reporting. As of April 2016, Israel had four campuses or
institutions in China, while China had none in Israel. In May 2014,
Tel Aviv University partnered with Tsinghua University to establish
the XIN Center, a “joint center for innovative research and education
to be funded by government and private enterprise.”61 In December
59 Lidar Gravé-Lazi, “Looking to China for Higher Education,” Jerusalem Post, May 11,
2016.
60 Muhammad Zulfikar Rakhmat, “China and Saudi Arabia: Strengthening Ties Through
Education,” Daily Sabah, April 13, 2014.
61
Tova Cohen, “Tel Aviv, Tsinghua Universities Set Up $300 mln Research Center,”
Reuters, May 19, 2014.
2015, the Technion–Israel Institute of Technology began construction

on the Guangdong Technion–Israel Institute of Technology (GTIIT)
in Shantou, the first Israeli university in China and one of only two
foreign universities allowed to establish an independent program in
China (the other being the University of Moscow).62 Construction
was finished, and the GTIIT began welcoming its first students in the
summer of 2017.63 In March and April 2016, Ben-Gurion University of
the Negev also established a joint center for entrepreneurship and inno-
vation with Jilin University, while the University of Haifa established
a joint laboratory building on the campus of East China Normal Uni-
versity in Shanghai.64 The joint laboratory “will specialize in research
in ecology, big data, biomedicine, and neurobiology. The building will
be funded entirely by the Chinese government. . . .”65 The establish-
ment of Israeli research institutions in China is therefore a very recent
phenomenon, beginning in the 2010s. We do not assess whether the
motivations are primarily push factors (e.g., Israeli institutions wanting
to move into China to broaden their own opportunities) or pull fac-
tors (e.g., China is eager to create alliances with Israeli universities and
is willing to pay and set other conditions that ensure that ventures are
valuable for the Israelis).
Senior Academic Exchanges

Senior academic exchanges are the final measure of educational and
cultural cooperation we consider. These are important because they
62
Technion–Israel Institute of Technology, “Launch of First Israeli University in China,”
December 16, 2015; and Avi Blizovski, “Machon Chadash: Ha’Sinim Yilmedu Chadshanut
Meha’Yisraelim” [“New Institute: The Chinese Will Learn Innovation from the Israelis”],
PC Anashim U’Mechasvim, December 26, 2017.
63 Ellie Bothwell, “Israel Looks to Asia,” Inside Higher Ed, July 14, 2017.
64 David Shamah, “Haifa, Ben-Gurion Universities to Open R&D Centers in China,”
Times of Israel, April 6, 2016.
65 Witte and Sunshine, 2017.
can serve as milestones in a relationship, yielding major cooperation

agreements. To measure such exchanges, we looked particularly at
visits by university presidents and government officials responsible for
education issues.
As an example of how such visits build on each other, in March
1995, a former minister of the Israeli Ministry of Education, Culture
and Sport visited the State Commission of Education of China, lead-
ing to a Memorandum of Intent of Education Cooperation. In March
the following year, a delegation of Chinese university presidents visited
seven Israeli universities and signed a Memorandum of Cooperation
and Understanding on Education. In April 2000, Chinese Minister of
Education Chen Zhili visited Israel, where she signed an Agreement
on Cooperation in the Field of Education with the Israeli Education
Ministry.66 More recently, in January 2015, during a visit by Israeli
Foreign Minister Avigdor Lieberman, he and Chinese Vice Premier Liu
Yandong signed the “China-Israel Innovation Cooperation Three-Year
Action Plan,” which proposed the founding of the China-Israel 7+7
Research-Based University Alliance.67 In March 2016, the XIN Center
hosted the Inaugural Forum of Presidents of Israel-China Higher Edu-
cation Institutions in Jerusalem.68
Senior exchanges between Israeli and Chinese educational insti-
tutions also have taken place at the unofficial level. We were able to
find reporting on ten exchanges between Israeli and Chinese university
leaders between May 2016 and June 2017. Among these, four yielded
agreements focused on deepening collaboration on scientific research
and student exchanges. In May 2016, the vice president of the South
China University of Technology visited the Hebrew University of Jeru-
66 Embassy of the People’s Republic of China in the State of Israel, “Educational Exchanges,”
webpage, September 21, 2004.
67 XIN Center, undated.
68 XIN Center, “XIN Holds Israel-China Higher Education Forum,” blog post, March 29,
2016.
salem and the University of Haifa, signing memoranda of cooperation

to “carry out student exchange programs and scientific research.”69 In
late November 2016, the vice president of Glasgow College, University
of Electronic Science and Technology of China signed a Memorandum
of Understanding and Agreement with Ariel University to “cooper-
ate in scientific research, doctoral and post-doctoral development.”70 In
early 2017, the president of Hebei GEO University (HGU) signed an
agreement with Hebrew University to “receive faculties and students
of HGU for degree education or short-term academic exchanges.”71
Finally, in late June 2017, the president of the Chinese Academy of Sci-
ences Institute of Automation (CASIA) visited the University of Haifa,
where he signed an agreement on research collaboration.72 Senior
exchanges between the two countries’ educational institutions will
likely persist and grow in the coming years.
Tourism
Tourism between Israel and China also has been on the rise. According
to Israel’s Central Bureau of Statistics, in 2014, the number of tourists
from China was 32,400, including day visitors. By the end of 2017, this
number had risen to 123,900, including day visitors, or an increase of
almost 400 percent in just three years’ time (Figure 4.10). A possible
contributor to this increase is an agreement between the two countries
69 South China University of Technology, “SCUT Delegation Visits Universities in Israel,

Belgium and Germany,” SCUT News Network, July 9, 2016.
70 Daniel Ni, “UESTC Delegation Visited Israeli and Italian Universities,” Glasgow Col-
lege, University of Electronic Science and Technology of China, webpage, December 6,
2016. Notably, Ariel University is in the West Bank, suggesting that there are limits to
China’s support of the Palestinians.
71 Hebei GEO University, “HGU Delegation Visits Institutions in Israel and Egypt,” web-
page, April 12, 2017.
72 CASIA, “CASIA Establishes Collaboration with the University of Haifa, Israel,” press
release, June 29, 2017.
Figure 4.10
Chinese Tourists to Israel, 2014–2017
140
Number of Chinese tourists per year,
120
100
thousands
80
60
40
20
0
2014 2015 2016 2017
Year
SOURCE: Data are from Central Bureau of Statistics (Israel), “Table 3. – Visitor Arrivals
(1), by Continent and Country of Citizenship,” 2018; and Central Bureau of Statistics
(Israel), “Visitor Arrivals, by Country of Citizenship,” data tables from Statistical
Abstract of Israel, accessed on August 8, 2017.
that entered into effect on November 11, 2016. According to the agree-

ment, “a Chinese citizen holding an ordinary passport could request
a multi-entrance B2 visa for a period of up to ten years at any Israeli
embassy/consulate worldwide.”73 Israeli citizens visiting China will be
able to do the same, making Israel only the third country in the world
to have such an agreement with China, after the United States and
Canada.74 This agreement could further boost bilateral tourism in the
coming years.
73 Embassy of Israel in China, “Ten-Year Multiple Entry Visa,” webpage, January 24, 2018.
74 Raphael Ahren, “Israel and China to Sign 10-Year Multiple Entry Visa Deal,” Times of
Israel, March 27, 2016.
Conversely, official statistics on the number of tourists from Israel

to China are not available, as neither the CSYD—which is compiled
by the National Bureau of Statistics of China—nor China’s Ministry
of Culture and Tourism provides statistics for Israel specifically. Sta-
tistics for Israel might instead be grouped with the “Others” category
under the overall section for Asia. However, other sources indicate that
the number of tourists from Israel to China might have been on the
increase. Globes newspaper, citing the Israel Airports Authority, notes
that “54,000 passengers travelled on the Tel-Aviv Beijing route in 2014,
up 5 percent from 2013.”75 However, this number could include Chi-
nese going home or Israelis stopping in China en route to other des-
tinations and could exclude travelers to China on non-direct flights.
One other sign of the increased travel between China and Israel,
for whatever purpose, is the proliferation of direct flights between the
two countries. As of late November 2018, there were nonstop flights to
four cities in China.76 The Tel Aviv–Beijing route was a long-standing
El Al route that Air China also flew in the 1990s; that route is now a
code-share flown solely by El Al.77 In 2016, Hainan Airlines launched
a competing route to Beijing.78 In 2017, Hainan extended its service
to a new direct route to Shanghai.79 And in 2018, the same airline
launched a direct flight to Guangzhou and was considering starting
75 Sapir Peretz-Zilberman, “Hainan Airlines to Launch Tel Aviv-Beijing Route,” Globes,

January 12, 2015.
76
Israel Airports Authority, “Online Flight Timetable Ben Gurion Airport,” webpage,
undated.
77 Dani Sadeh, “New Chinese Airline to Begin Competing with El Al,” Ynet News, June 5,
2016.
78 Sadeh, 2016.
79 Michal Raz-Chaimovich, “Hainan Airlines to Launch Tel Aviv–Shanghai Flights,”
Globes, May 25, 2017.
a direct flight to Shenzhen.80 Also in 2018, Sichuan Airlines started a

direct flight to Chengdu.81
Other Cultural Relations

Outside of academic exchanges and tourism, Israel and China have
made cultural outreach in other ways. In the media sphere, for exam-
ple, the Times of Israel, a major English-language newspaper in Israel,
for a time produced a Chinese-language edition in addition to versions
in Arabic, Persian, and French. China Plus, of China Radio Interna-
tional, China’s state-owned international broadcaster, has a Hebrew
channel among channels in dozens of other languages.82 The 19th
China Shanghai International Arts Festival held an Israel Culture
Week on November 11–15, 2017, to “honor the 25th anniversary of the
establishment of diplomatic relations between China and Israel.”83 The
organizer of the event was the consulate general of Israel in Shanghai
and it appears to have been the first cultural event celebrating Israel in
China.84 On the Chinese side, there have been efforts by various orga-
nizations to promote China’s positive role in saving Jewish refugees
during the Holocaust. For example, in August 2017, Shanghai Jiaotong
University Publishing House announced that it would be establishing
a “Jewish Refugees to China Database.” Construction of the database
was to proceed in three phases. Phase One was to consist of collecting
memoirs from refugees and data on Jewish refugees from old newspa-
80 Ari
Rabinovitch, “Hainan Airlines Begins Guangzhou–Tel Aviv Direct Flights,” Reuters,
August 2, 2018.
81 Michal Raz-Chaimovich, “Sichuan Airlines to Open New Route to Tel Aviv,” Jerusalem
Post, August 29, 2018.
82 “China Plus,” homepage, undated.
83 Qi Xijia, “Israel Culture Week,” Global Times, November 2, 2017.
84 Consulate General of Israel in Shanghai, “Israel Culture Week Opens in Shanghai,” web-
page, November 19, 2017.
pers. Phase Two was to consist of collecting files and data from around
the world, from different parts of China and also from foreign insti-
tutions, such as the Hoover Institution Library and Archives in the
United States, the National Library of Israel, the Zionist Archives, and
the foreign ministry archives of multiple countries. Phase Three was
to consist of recording oral histories from Jewish refugees and includ-
ing written records, photographs, and videos.85 The National Office
for Philosophy and Social Sciences, under the National Social Science
Fund of China, undertook research into Jewish refugees to China and
issued periodic work reports on research progress. Eight such reports
were issued, with the last one released on June 26, 2015.86
The data on education and cultural relations suggest several pat-
terns. First, as with other forms of relations, Chinese interest in technol-
ogy and IP is high, as reflected in the nature of the academic programs
and senior academic exchanges. Second, tourism patterns underscore
the patent data in suggesting that Israel is a services exporter—Chinese
tourism to Israel is a Chinese services import from Israel. Third, China
is trying to reach out culturally to Israel, for example, in the form of
Confucius Institutes. However, the outreach in the other direction is
not as active at the nonofficial level, in the form of the limited number
of Israeli students studying in China. This underscores the finding else-
where in the report that Israel might lack the policy-oriented China-
related expertise it needs.
85 Luo Xin [罗昕], “Shanghai Jiaotong University Publishing House to Build ‘Jewish Refu-
gees to China Database’” [上海交通大学出版社将建“来华犹太难民数据库”], The Paper
[澎湃], August 14, 2018.
86 National Office for Philosophy and Social Sciences [全国哲学社会科学工作办公室],
“Research on Jewish Refugees to China (1933–1945)” [来华犹太难民研究 (1933–1945)],
2013.
Conclusion
Overall, relations between China and Israel are broadening and deep-
ening on multiple fronts. Although bilateral relations appear not to
be especially close in some areas, they are booming in others. In the
political and defense realm, for example, relations between the two
countries are cordial but not particularly warm, with each side having
other, more preferred partners. Economic relations, on the other
hand, are much stronger, as noted by the increase in trade between
the two countries, the growth in Israeli patent applications and grants
in China, and Chinese investment in Israel, which we discuss further
in the next chapter. Educational relations are somewhere in between
these two extremes. The number of students that Israel and China have
in the other country has remained very limited, but is now growing,
along with the number of high-level educational exchanges. Educa-
tors in both countries appear to be interested in increasing cooperation
between their institutions, and the signing of various agreements and
partnerships could pave the way for a rapid increase in the number of
student exchanges in the future. Similarly, there is a lot of potential for
growth in the realm of tourism and, at least on the Israeli side, there
is high interest in fueling that growth. Finally, there have been other
forms of cultural outreach, from cultural appreciation events to Chi-
nese institutions working to promote a positive image of their country
as a rescuer of Jewish refugees during the Holocaust.
These trends might indicate how relations between Israel and
China will evolve in the future: continually strengthening ties in such
“soft” areas as economics, education, and tourism coupled with main-
taining the status quo in such “hard” areas as politics and defense. As
the next chapter demonstrates, there has been remarkable growth in
Chinese investments and acquisitions as well as involvement in infra-
structure projects in Israel. Continuation of these trends could not only
have important economic implications, but also political and security
implications.
CHAPTER FIVE
Chinese Investment and Construction in Israel
Chinese investment and construction activities in Israel have risen dra-

matically in recent years. This chapter examines Chinese investments
and acquisitions in Israel from 2007 to 2018, as well as major construc-
tion projects in Israel carried out by Chinese companies over the same
period. Because these activities include greater involvement in a target
economy than does trade, we pay specific attention to Chinese compa-
nies and Israeli entities that present possible areas of concern to Israeli
or U.S. interests. First, we provide an overview of investment and con-
struction activities, including estimates of the total amount of invest-
ment and construction, as well as the scope of investments and other
economic activity across different sectors. Then we address the profiles
of Chinese entities investing or engaging in construction in Israel and
several factors that should be considered when assessing the risks posed
by this activity. Lastly, we look at several Israeli companies that have
been the targets of Chinese investment and assess whether there are
risks from Chinese ownership of or stake in these entities.
Drawing on a variety of sources, we assessed 92 investments—
both direct investments and investments through venture capital—and
infrastructure projects involving 42 Chinese companies and 80 Israeli
companies that were targets for Chinese investment. We identified 11
companies that raise potential concerns for Israel or the United States.
We also assessed a subset of the Israeli companies that received invest-
81
ment, with a focus on those that work on potentially sensitive or dual-

use technology—i.e., technology with applications to both the civilian
and military markets—and those that received investment from the
Chinese firms we judged most likely to pose security concerns to Israeli
or U.S. interests. We provide additional information on methods in
Appendix A.
Investment and Construction Overview
Chinese investment primarily flows to wealthy countries, while Chi-

nese construction typically takes place in developing countries.1
Israel is an exception, being both a developed country with a sizable
advanced technology sector as well as a node along China’s BRI, which
emphasizes connecting China to Europe, Asia, Africa, and the Middle
East through major infrastructure projects. As a result, Israel is a rare
example of a country with high levels of both Chinese investment and
construction.
We studied 92 investments and construction projects involving
Chinese entities in Israel between 2007 and 2018. Reported invest-
ment totaled $12.9 billion, while contracts for the construction and
operation of infrastructure projects totaled more than $4 billion.2 Chi-
nese investment and construction activities present distinct concerns.
The primary concern regarding investment relates to Chinese own-
1 Derek Scissors, “Private Data, Not Private Firms: The Real Issues in Chinese Invest-
ment,” American Enterprise Institute, Washington, D.C., January 10, 2018.
2 For comparison, total nominal investment in transport infrastructure and communica-
tions from 2007 to 2016 was $34.8 billion (Bank of Israel, Annual Reports, 2007–2016;
see Table 2.A.26 “Investment in Transport and Communications, 1988-,” in “Statisti-
cal Appendix and Complementary Data”). Values in New Israeli Shekels were converted
using exchange rates from the Organisation for Economic Co-operation and Development,
National Currency to U.S. Dollar Spot Exchange Rate for Israel [CCUSSP02ILA650N],
retrieved from Federal Reserve Bank of St. Louis, July 14, 2018.
Chinese Investment and Construction in Israel 83
ership of companies that might possess sensitive technology or data,

while concerns over construction center on the use of infrastructure
projects to further Chinese foreign policy goals. The operation of
infrastructure projects could present risks of surveillance. Both con-
struction and investment activity raise concerns of Chinese social and
political influence.3 This influence and potential leverage is a major
concern regarding the growing scale and scope of Chinese investment
and construction activity in Israel more generally; however, the focus
of this chapter is on categories of risk presented by specific investments
and companies.
Construction and Operation of Infrastructure

We looked at five major infrastructure projects undertaken or to be
undertaken by Chinese companies in Israel at an estimated total cost
of more than $4 billion. All five projects involve the construction of
transportation-related infrastructure, while two also involve the opera-
tion of new facilities; all are to be completed by Chinese state-owned
enterprises. These projects include expansion of the Ashdod port, par-
tial construction and operation of a new container terminal at the
Haifa port for 25 years (Ashdod and Haifa are Israel’s only two ports
on the Mediterranean Sea), construction and operation of the Tel Aviv
light rail (two Chinese companies are involved in building different
sections), and construction of the Carmel Tunnels (a Chinese company
is a subcontractor).4 In addition, there is a proposed rail line between
3 Scissors, 2018.
4 Avi Bar-Eli, “Carmelton, Chinese Firm Reach Compromise on Tunnels Project,” Haaretz,
November 3, 2008; Amiram Barkat, “Eilat Railway Hits Financing Buffers,” Globes, May 21,
2014; Angela Yu, “Chinese Port Operator Signs Deal to Run Israel’s Haifa Port,” JOC.com,
June 2, 2015; David Shamah, “China Firm to Build New Ashdod ‘Union Buster’ Port,”
Times of Israel, September 23, 2014b; Hedy Cohen, “Arison, Chinese Co Win TA Light Rail
Underground Tender,” Globes, May 19, 2015; and China Railway Construction Corporation
Ltd., “CCECC Signs Israel’s First Light Rail Operation Maintenance Contract,” webpage,
November 16, 2017.
Eilat and the Mediterranean that, if approved, would likely be built

by a Chinese state-owned enterprise at an estimated cost of a little less
than $2 billion.5 The port projects and the Eilat-Mediterranean rail-
way line are of particular note, as they represent pieces in the larger
Chinese BRI, which aims to physically connect Europe to China
in multiple ways. We discuss this topic further in the following sec-
tions, after introducing a subset of the Chinese entities investing and
involved in construction in Israel, as part of the concerns these entities
could represent.
Investment
The agriculture and technology sectors were the biggest targets of Chi-
nese investment by monetary value, at approximately $5.3 billion in
agriculture and $5.7 billion in technology; together, these two sectors
accounted for approximately 87 percent of total Chinese investment
in Israel. Furthermore, the agriculture-related investment included a
strong technology component in that it focused on agricultural tech-
nology. For agriculture, the investment figure is driven by the acqui-
sition of Adama (previously Machteshim-Agan) for $2.8 billion by
ChemChina, which acquired 60 percent of the agrochemical company
in 2011 and the remaining 40 percent in 2016.6 The technology sector
was by far the biggest target of Chinese investment in terms of the
number of companies we examined: Fifty-four of the 92 investments
were in Israeli technology companies. Other sectors that received Chi-
nese investment over this period included biomedical and pharmaceu-
tical companies (Figure 5.1). We also have included venture capital
as a separate category; most of the Israeli venture capital companies
to which Chinese entities have provided funding invest primarily in
5 Barkat, 2014.
6 Yoram Gabison, “IDB Selling Remaining 40% Stake in Adama to ChemChina for $1.4
Billion,” Haaretz, July 18, 2016.
Figure 5.1
Chinese Investment in Israel by Sector, 2007–2018
60
Number of investments
50 Investment sum (in
Number of investments
billions USD)
40
30
20
10
0
Agriculture Biomedical Technology Venture Other
(non-medical) capital
Sector
SOURCE: Authors’ assessments from sources described in Appendix A.
the technology or biomedical technology sectors. The reported values

and counts likely underestimate the actual totals, as some investment
amounts were undisclosed, and our compilation of 92 investments over
this period might not be exhaustive. Although some amounts repre-
sented the total investment in funding rounds in which the Chinese
companies were not the sole participants, this overestimation might be
counterbalanced by undisclosed amounts of investment.
Chinese Entities
Of the 42 Chinese companies involved in investments and infrastruc-

ture projects in Israel, we identified 11 that raise potential concerns for
Israel or the United States. These concerns include connections with
the Chinese military or government; issues related to security, privacy,
or censorship; business activities with Israel’s adversaries, such as Iran;

and the possible implications of Chinese development and operation
of major infrastructure that might be important to Israel’s security.
Table 5.1 presents an overview of 12 companies of concern: the original
11 studied and the Hong Kong–based venture capital firm Horizons
Ventures Ltd., which is included because of its outsized involvement
in Israel. Horizons Ventures, which focuses on disruptive technology
start-ups, invested in more Israeli companies than any other Chinese
entity: 21 of the 92 investments, at a total of $273 million. Li Ka-
shing, Hong Kong’s richest man and the main figure behind Horizons,
has been described as “the most active foreign investor” in Israel. Li
also donated $130 million through his Li Ka Shing Foundation to the
Technion–Israel Institute of Technology in Haifa, with the goal “to
foster knowledge transfer between China and Israel.”7
Military and Government Connections

A key concern is the nature of the ties that Chinese companies invest-
ing or building major infrastructure projects in Israel have with the
Chinese government, armed forces, or military entities. Ties to military
intelligence or to Chinese operations in the South China Sea would be
particularly concerning to the United States. Cybersecurity risks and
the potential for the transfer of sensitive technologies are the primary
issues with the military and government connections of companies
engaging in investment, while ties to objectionable Chinese military
activity are the main concern related to construction. Surveillance also
is a concern for some investments, especially in the telecommunica-
tions sector, and for contracts to operate such major infrastructure as
rail and ports.
One of the state-owned companies working on infrastructure
projects in Israel has completed work for the Chinese armed forces,
7 Shu-Ching Jean Chen, “Li Ka-shing and Horizons Ventures: The Making of a Venture
Powerhouse,” Forbes, March 12, 2014.
Table 5.1
Chinese Companies That Have Invested or Built Infrastructure in Israel
Israeli Entities or
Chinese Entity Company Information Ownership Activity Projects Area of Concern
Alibaba E-commerce and Public Investment Visualead, Thetaray, Security issues;
internet services Twiggle, Lumus, censorship
company; investments Jerusalem Venture concerns related
include eight Israeli Partners (JVP), Infinity to the purchase
technology or venture Augmented Reality, of Hong Kong
capital companies SQream Technologies newspaper South
China Morning
Post
Baidu Web services Public Investment Pixellot, Tonara, Government

company that also Taboola, Dynamic connections:
is doing artificial Yield, Carmel Ventures national lab
intelligence research for artificial
and developing intelligence;
autonomous cars; security issues
investments include
five Israeli technology
companies or venture
capital funds
China Technology, Private Investment IronSource Ltd. Princeling
Broadband media, and connections
Capital Partners telecommunications (explained in more
investment company detail in text)
87
Table 5.1—Continued
88
Israeli Entities or

China Infrastructure projects State- Construction Construction of Military
Communications worldwide, including owned Ashdod port, construction
Construction Gwadar Port in proposed Eilat- projects, including
Company and Pakistan and Colombo Mediterranean rail line in the South China
subsidiaries, Port City in Sri Lanka Sea
such as China
Harbour
Engineering
Company
China Railway Infrastructure projects State- Construction Portion of the Tel Aviv Conducts business
Tunnel Group in more than 80 owned light rail in Iran; corruption
countries
Horizons Investments in more Private Investment More than 20 Israeli Largest investor in
Ventures Ltd. than 80 companies companies Israel by number
(Hong Kong) worldwide, primarily of companies
in the United States
and Israel, focusing
on disruptive
technologies
Huawei Network and Private Investment Toga Networks, Ties to the Chinese
Technologies telecommunications HexaTier government
Co., Ltd. equipment company and military;
accused of selling
surveillance and
other equipment
to Iran in violation
of sanctions
Israeli Entities or
Kuang Chi Technology Private Investment eyeSight, AgentVI, Government
conglomerate, with Beyond Verbal connections: first
expertise in areas from company Xi Jinping
materials technology visited as head of
to aerospace; Kuang the CCP, one of
Chi plans to establish several technology
an “International companies chosen
Innovation by the government
Headquarters” in to participate in a
Tel Aviv and invest mixed-ownership
$300 million in Israel pilot to introduce

through its Global private-sector
Community of innovation into
Innovation Fund, of China Unicom
which it has already
invested $50 million
Lenovo Personal computers Public Investment Neura, Canaan Government
and electronics Partners Israel connections:
company founder served as
National People’s
Congress delegate;
security issues
Tencent Internet company: Public Investment Contacts+, Government
maker of WeChat, Singulariteam connections: CEO
a social media served as National
application with People’s Congress
more than 900 million delegate; security
monthly active users and censorship
issues
89
90
Israeli Entities or

Xiaomi Smartphone and Private Investment Pebbles Interfaces Government
electronics company connections:
received
government
support to develop
semiconductor
technology;
founder served as
National People’s
Congress delegate;
security issues
ZTE Corporation Network and Public Investment Rainbow Medical Ties to Chinese
telecommunications government
equipment company and military;
accused of selling
surveillance and
other equipment
to Iran in violation
of sanctions
SOURCE: Authors’ assessments from sources described in Appendix A.
including in the South China Sea. Among the companies investing

in Israel, telecommunications companies Huawei Technologies Co.,
Ltd. and ZTE Corporation are especially noteworthy for their less-
than-transparent government and military connections, as well as for a
variety of potential security problems, which we discuss in more detail
later. Other potential concerns include companies receiving direct
support from the government to develop dual-use technologies and
company executives having government connections, either through
holding government positions or through personal connections with
high-ranking officials or their relations (“princelings”).8
China Communications Construction Company (CCCC), a state-
owned enterprise that plans to build the proposed rail line from Eilat
to the Mediterranean if approval for the embattled project is received,
has completed construction projects for the Chinese military, includ-
ing in the South China Sea, through its subsidiaries.9 China Harbour
Engineering Company (CHEC), one of CCCC’s subsidiaries, built
a PLA-operated satellite ground station in Argentina. Although the
facility’s purpose is allegedly for scientific research, its secretive nature,
advantageous location, and connections to the PLA’s General Arma-
ments Department and Xi’an Satellite Control Center have led many
observers to suspect that it functions as an intelligence collection site.10
CHEC also has been contracted to build Israel’s new Ashdod port.11
8 The term princelings refers to relations, particularly descendants, of high-ranking former

CCP officials. Princelings often are perceived to receive preferential treatment from this
status. Many princelings also hold high-level positions in government or business.
9 Barkat, 2014.
10
Victor Robert Lee, “China Builds Space-Monitoring Base in the Americas,” The Diplo-
mat, May 24, 2016.
11 Shamah, 2014b.
CCCC Dredging, another subsidiary, allegedly has been involved in

China’s island reclamation efforts in the South China Sea.12
There has been a great deal of concern in the United States about
Huawei and ZTE. In October 2012, the U.S. House of Representatives
Permanent Select Committee on Intelligence released a report detail-
ing the connections between telecommunications companies Huawei
and ZTE and the Chinese government, and the risks posed by these
companies doing business in the United States and with U.S. compa-
nies.13 The Committee was concerned about the threat of “economic
and foreign espionage” because of the potential influence of the Chi-
nese government in these companies’ business operations and the pos-
sibility that they could provide access to telecommunications networks
for intelligence-gathering purposes.
The report’s conclusions included that “Huawei may have con-
nections and ties to Chinese leadership that it refuses to disclose.”
Ren Zhengfei, Huawei’s founder and president, allegedly is the former
director of the PLA Information Engineering Academy, believed to be
affiliated with China’s signals intelligence department. The report fur-
ther referenced unconfirmed accounts that Huawei Chairwoman Sun
Yafang previously worked at China’s Ministry of State Security (Chi-
na’s major external intelligence agency).14 The Committee received evi-
12 Laura Zhou, “Chinese Island-Building Firm Wins Contract with South China Sea Rival
Claimant, the Philippines,” South China Morning Post, October 27, 2016.
13 Mike Rogers and C. A. Dutch Ruppersberger, Investigative Report on the U.S. National
Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE, Washing-
ton, D.C.: U.S. House of Representatives, Permanent Select Committee on Intelligence,
October 8, 2012.
14 Bill Gertz, “Chinese Telecom Firm Tied to Spy Ministry,” Washington Times, October 11,
2011; Cai Ye [蔡烨], “Evidence from the Histories of Huawei’s Ren Zhengfei and Sun Yafang
That Must Be Spoken” [见证华为任正非和孙亚芳历史不得不说的事], Sina Blog of Cai Ye
[新浪-蔡烨的博客], April 19, 2012; Bryan Krekel, Patton Adams, and George Bakos, Occu-
pying the Information High Ground: Chinese Capabilities for Computer Network Operations
and Cyber Espionage, Falls Church, Va.: Northrop Grumman Corp., March 7, 2012.
dence from a former employee that Huawei provided “special network

services to an entity the employee believes to be an elite cyber-warfare
unit within the PLA.” A Northrop Grumman report on Chinese
cyber capabilities, prepared for the U.S.-China Economic and Security
Review Commission in 2012, similarly concluded that
the combination of recent infusions of cash, regular appearances

at PLA defense industry events, and working relationship with
various government research institutes on projects with dual
use applications suggests that an ongoing relationship between
Huawei and the Chinese military and Chinese political leader-
ship may exist.15
The Committee noted that, like Huawei, ZTE’s responses lacked

transparency and the company was uncooperative with the investiga-
tion; the report found that “the history and structure of ZTE . . . reveal
a company that has current and historical ties to the Chinese gov-
ernment and key military research institutes.”16 One concern had to
do with ZTE’s largest shareholder, Zhongxingxin, which is partially
owned by two state-owned enterprises that “allegedly partake in sensi-
tive technological research and development for the Chinese govern-
ment and military.”17 According to the Northrop Grumman report,
ZTE maintains a diverse relationship with the PLA that encom-

passes collaborative research with military and civilian universi-
ties, including satellite navigation, data link jamming techniques,
training of active duty PLA personnel, and as a regular exhibitor
and presenter at PLA sponsored defense industry expositions.18
15 Krekel, Adams, and Bakos, 2012.

16 Rogers and Ruppersberger, 2012, p. 38.
17 Rogers and Ruppersberger, 2012, p. 39.
18 Krekel, Adams, and Bakos, 2012, p. 71.
In January 2018, AT&T canceled a deal to sell the Huawei smart-

phone in the United States. The cancellation came a month after mem-
bers of Congress sent a letter to the Federal Communications Commis-
sion citing concerns about Huawei’s ties to the PRC and the company’s
role in espionage.19 No such limitations exist on Huawei’s products in
Israel and, as discussed later, it has invested in at least two Israeli tech-
nology companies, Toga Networks and HexaTier, which raise other
concerns. Huawei’s investment in Toga was initially disguised and
unreported, and this secrecy and the continuing uncertainty of the
nature of Huawei’s and Toga’s relationship also is a source of concern.20
In February 2018 testimony to the Senate Select Committee on
Intelligence, six U.S. intelligence leaders cautioned against private cit-
izens using Huawei or ZTE products.21 In particular, FBI Director
Chris Wray noted that a company “beholden to foreign governments
that don’t share our values” could have the “capacity to maliciously
modify or steal information and provides the capacity to conduct
undetected espionage” if it had a position inside the U.S. telecommu-
nications network.22
In April 2018, the U.S. Department of Commerce announced
its denial of export privileges for ZTE, meaning that it banned the
company from buying components made in the United States for the
following seven years. The ban came after the Department of Com-
merce determined that ZTE violated the terms of a 2017 settlement, as
part of which it agreed to pay $892 million in fines and penalties and
19 Paul Mozur, “AT&T Drops Huawei’s New Smartphone Amid Security Worries,” New
York Times, January 9, 2018.
20 Orr Hirschauge, “China’s Huawei Is Coy on Ties to Israeli Firm,” Wall Street Journal,
June 2, 2016.
21
Sara Salinas, “Six Top U.S. Intelligence Chiefs Caution Against Buying Huawei Phones,”
CNBC, February 13, 2018.
22 Daniel Van Boom, “Don’t Use Phones from Huawei or ZTE, FBI Director Says,” CNET,
February 14, 2018.
committed to fire and discipline some of its senior staff. The same day
the ban was announced, the United Kingdom’s National Cyber Secu-
rity Center warned British telecom operators not to use ZTE’s telecom
equipment because of security concerns related to the company’s state-
backed ownership.23
The United States lifted its ban on ZTE in July 2018, following
an agreement with the company that included the payment of a $1 bil-
lion penalty, $400 million placed in an escrow account, and other
conditions.24 However, pressure on both companies has continued to
mount. In August, the United States largely banned the use of Huawei
and ZTE technology by the U.S. government and contractors.25 By the
end of November, the United States, Australia, and New Zealand had
all banned the use of Huawei technology in next-generation 5G net-
works, and UK officials had expressed concerns.26
In terms of other privately owned or publicly traded Chinese com-
panies investing in Israel, many of the executives from these compa-
nies have served as delegates to the National People’s Congress (NPC)
or have other high-level PRC government connections. The NPC is
China’s official main legislative body, although it wields very little real
power, primarily acting as a rubber stamp in passing measures handed
down from the Party or State Council.27 The NPC’s nearly 3,000 dele-
23
Moody’s Investor Service, “Telecom Equipment: U.S. Bans Chinese Telecom Equipment
Maker ZTE from Buying U.S. Components, a Credit Positive for Its Rivals,” April 23, 2018.
24 Karen Freifeld, “U.S. Lifts Ban on Suppliers Selling to China’s ZTE,” Reuters, July 13,
2018.
25
Matthew Humphries, “U.S. Government Agencies Can’t Buy Huawei or ZTE Products
Anymore,” PC Magazine, August 14, 2018.
26 RobertFife and Steven Chase, “New Zealand Becomes Third Five Eyes Member to Ban
Huawei from 5G Network,” The Globe and Mail, November 29, 2018; Matthew Field, “Brit-
ish and German Concerns Mount over China’s Huawei,” The Telegraph, November 29, 2018.
27
Austin Ramzy, “Q. and A.: How China’s National People’s Congress Works,” New York
Times, March 4, 2016.
gates include many of China’s most influential businesspeople, provid-

ing some degree of political protection to their companies and giving
them a platform to raise issues of concern. It is therefore not surpris-
ing or necessarily concerning that the executives whose companies are
investing in Israel are members. However, inviting businesspeople to
participate in the NPC might serve to engender Party loyalty.28 Ten-
cent CEO Pony Ma, Xiaomi’s Lei Jun, and Lenovo’s Liu Chuanzhi
have all served as delegates. Many tech company executives, including
leaders from Tencent, Alibaba, Lenovo, and Baidu, traveled with Presi-
dent Xi during his first state visit to the United States in 2015.29
Chairman Edward Tian of China Broadband Capital Partners
(CBC), a privately owned technology, media, and telecommunications
investment company, got his start as the co-founder of AsiaInfo Hold-
ings, Inc., China’s first internet provider. He then served as the CEO
of China Netcom Co., Ltd. and as Vice Chairman and CEO of China
Netcom Group from 1999 to 2006.30 China Netcom, a state-owned
telecommunications service provider that merged with China Unicom
in 2008, was backed by the son of former Chinese President Jiang and
appears to have enjoyed preferential treatment because of this connec-
tion.31 Along with Ping An Ventures, a subsidiary of Chinese financial
services company Ping An Insurance, CBC invested $85 million in
Israeli mobile advertising company IronSource in 2015.32
28
Reuters, “China’s Billionaire Lawmakers Keep Getting Richer and Richer,” Fortune,
March 2, 2017.
29 “What’s in a Picture? The Unspoken Messages in Xi Jinping’s Group Portrait with CEOs
and Senior Executives During His First State Visit to the U.S.,” South China Morning Post,
September 24, 2015.
30 CBC, “CBC Team,” webpage, 2012.
31
John Pomfret, “Lines Crossed in China; State-Owned Firms Bully Customers, One
Another in Fight for Telecom Turf,” Washington Post, August 17, 2002.
32
Rebecca Fannin, “Recent Linkups by China-Israel VCs and Tech Startups Spell More
Opportunity Than Risk,” Forbes, November 19, 2015.
Several of the companies also are involved in partnerships with

Chinese government agencies or have received significant funding
from the government to develop new technologies. Major mobile phone
and smart appliance developer Xiaomi received government support
to develop its own smartphone processor, which was launched in its
newest smartphones in early 2017. A Xiaomi representative declined to
say how much money the company received from the government, but
stated that “assistance extended beyond cash to include research and
development.”33 As reported by the Wall Street Journal, “the support is
the latest sign of China’s push to develop its semiconductor industry,
which has included attempts to buy overseas chip companies for their
technology.”34 Transfers of semiconductor technology to China are an
area of concern because of its dual-use potential: Chips can be used in
weapon systems as well as in smartphones.35
Chinese search engine giant Baidu is partnering with the Chinese
government to advance artificial intelligence (AI), a technology widely
considered to be dual-use. Not only can it be developed specifically
for military purposes and is a focus of the Chinese military, but AI
has an “omni-use” potential, much like electricity.36 In February 2017,
33
Tim Culpan, “Xiaomi Is the China Trump Needs to Watch,” Bloomberg Opinion,
March 1, 2017.
34 Eva Dou, “Xiaomi Launches Its Own Chip, with an Assist from Beijing; Government
Funding Helped Smartphone Maker Develop Its Pinecone Surge S1 Chip,” Wall Street Jour-
nal, February 28, 2017.
35 In fact, in September 2017, upon recommendation by the Committee on Foreign
Investment in the United States (CFIUS), U.S. President Donald Trump blocked Chinese
government–backed Canyon Bridge Capital Partners from buying U.S.-based Lattice Semi-
conductor on national-security grounds, citing in part the use of Lattice products by the
U.S. government (Kate O’Keeffe, “Trump Blocks China-Backed Fund from Buying Lattice
Semiconductor,” Wall Street Journal, September 13, 2017). This was only the fourth time
since the start of CFIUS that a U.S. president has blocked a transaction.
36 On defense uses, see Elsa B. Kania, New Frontiers of Chinese Defense Innovation: Arti-
ficial Intelligence and Quantum Technologies, San Diego, Calif.: Study of Innovation and
China’s National Development and Reform Commission authorized

Baidu to establish a national laboratory for deep learning as part of a
larger push to develop China’s AI industry.37 The laboratory is to focus
on seven research areas, including “machine-learning-based visual rec-
ognition, voice recognition, new types of human machine interaction
and deep learning intellectual property.”38 The Baidu-led laboratory
includes multiple universities, including Beihang, “which is known for
military research.”39
The technology conglomerate Kuang Chi, which specializes in
technologies from advanced materials to smart city technology and
communications, was the first company that Xi visited after becoming
leader of the Party.40 In addition, Kuang Chi was selected by the Chi-
nese government, along with other tech giants like Alibaba and Baidu,
to inject money into state-owned telecommunications company China
Unicom in 2017 as part of a pilot program to introduce private-sector
expertise into the state-owned telecom sector.41 In May 2016, Kuang
Chi announced that it intended to invest $300 million in Israeli tech-
Technology in China, Institute on Global Conflict and Cooperation, University of Cali-

fornia, Research Brief 2018-12, May 2018. On the idea of AI as an omni-use technology,
see Jeffrey Ding, Deciphering China’s AI Dream: The Context, Components, Capabilities, and
Consequences of China’s Strategy to Lead the World in AI, Oxford, UK: Future of Humanity
Institute, March 2018.
37 He Wei, “Baidu to Lead National AI Effort,” China Daily, February 22, 2017; Stephan De
Spiegeleire, Matthijs Maas, and Tim Sweijs, Artificial Intelligence and the Future of Defense,
Netherlands: The Hague Center for Strategic Studies, 2017.
38 De Spiegeleire, Maas, and Sweijs, 2017, pp. 77–78.
39 Owen Churchill, “China’s AI Dreams,” Nature, Vol. 553, January 17, 2018, pp. S10–S12.
40 YangJingru [杨婧如], “Xi Jinping Observes Shenzhen Kuang Chi Research
Center: The Nation Should Select and Use the Most Outstanding Talent”
[习近平考察深圳光启研究院：国家应择天下英才而用], China News, December 14,
2012.
41
Bein Perez, “China Taps Nation’s Who’s Who of Technology to Anchor Ownership
Shakeup at Unicom’s Parent,” South China Morning Post, August 16, 2017.
nology companies through a Global Community of Innovation Fund

and planned to establish an International Innovation Headquarters
in Tel Aviv; Kuang Chi Chairman Liu Ruopeng asserted that Kuang
Chi’s goal was to “invest in the best local companies in the fields of
biometrics, communications, robotics, and augmented reality and take
them to the next level commercially and technologically.”42
Security and Censorship Concerns

Several of the Chinese tech companies investing in Israel have received
attention related to security vulnerabilities in their products or are
known to participate in Chinese censorship efforts. Whether these
security vulnerabilities are simply the result of sloppiness, are included
as standard practice for such technology companies, or are intention-
ally included to enable government surveillance is unknown. Chinese
internet companies are required to comply with censorship directives
and must turn over user data to the Chinese government upon request
if the data are stored on Chinese servers. These requirements give rise
to potential political concerns over these companies’ investments in
Israel.
Browsers made by Chinese technology giants Tencent, Alibaba,
and Baidu all contained “strikingly similar security vulnerabilities”
that left user data open to potential surveillance and malicious attack-
ers, according to reports by The Citizen Lab, a research center based at
the University of Toronto’s Munk School of Global Affairs.43 In early
2016, The Citizen Lab found that Tencent’s QQ browser transmitted
personal data, including URLs visited, Wi-Fi access points, and unique
device identifiers, with either weak or no encryption. One month ear-
42 Timesof Israel Staff, “Gesture Tech Firm eyeSight Nabs $20 Million Chinese Invest-
ment,” May 15, 2016; Shoshanna Solomon, “China’s Kuang-Chi to Set Up Tel Aviv Base,
Eyes Larger Firms,” Times of Israel, January 12, 2017.
43 Jeffrey Knockel, Adam Senft, and Ron Deibert, “Wup! There It Is: Privacy and Security
Issues in QQ Browser,” The Citizen Lab, March 28, 2016.
lier, The Citizen Lab had published a report on similar issues with
Baidu’s browser, which leaked users’ GPS coordinates in addition to
the same types of personal data leaked by Tencent’s browser.44 Aliba-
ba’s UC Browser also transmitted search terms, geolocation, and device
information with either no encryption or easily decryptable encryp-
tion, as reported by The Citizen Lab in May 2015.45 In addition, both
Tencent’s and Baidu’s browsers contained vulnerabilities that could be
exploited to install malicious code on users’ devices.
Both the Taiwanese government and the Indian Air Force inves-
tigated Xiaomi phones over potential security issues. In 2014, Xiaomi’s
devices were reported to send user data to servers in China, includ-
ing collecting address book data without permission, prompting a
Taiwanese government investigation.46 Storage of user data on serv-
ers in the Chinese mainland is a potential concern for Taiwan, given
legal requirements to share such data with the Chinese government if
requested. The results of the Taiwanese investigation are unknown,
but these security issues led the Indian Air Force to warn their person-
nel against using Xiaomi devices.47
Lenovo also has faced criticism related to security issues with its
products, especially with software preloaded on its devices. In 2015,
Lenovo encountered backlash over Superfish adware pre-installed on
some of its laptops. Superfish was designed as advertising software to
improve customers’ shopping experiences, but it left devices susceptible
to various attacks, including allowing attackers to view encrypted web
44 JeffreyKnockel, Sarah McKune, and Adam Senft, “Baidu’s and Don’ts: Privacy and
Security Issues in Baidu Browser,” The Citizen Lab, February 23, 2016.
45
Jakub Dalek et al., “A Chatty Squirrel: Privacy and Security Issues with UC Browser,”
The Citizen Lab, May 21, 2015.
46 MichaelGold, “Taiwan Government Investigates Xiaomi on Potential Cyber Security
Concerns,” Reuters, September 24, 2014.
47
Pradip R. Sagar, “Chinese Smartphones a Security Threat, Says IAF,” New Indian Express,
October 19, 2014.
traffic or to trick users into trusting fake websites and software.48 Nota-
bly, the vulnerabilities in Superfish were introduced through code from
an Israeli company, Komodia, and not by Lenovo itself. But Lenovo
has a pattern of including unnecessary and vulnerable pre-installed
software on its devices. Shortly after the Superfish incident, security
issues were discovered with software installed by the Lenovo Service
Engine, and in June 2016 the company issued an advisory instructing
users to uninstall preloaded Lenovo Accelerator software after security
researchers identified vulnerabilities.49
In addition to the above security concerns, Chinese tech compa-
nies have little choice but to play a role in China’s censorship efforts.
Tencent’s popular WeChat app, which has 938 million monthly active
users, has frequently come under fire for its censorship of sensitive
terms and images in both group and one-on-one private messages.50
According to a profile of Tencent by Fast Company, “Chinese Internet
companies, Tencent included, employ hundreds if not thousands of
their own censors.”51
Concerns over censorship also arose when Alibaba purchased
the Hong Kong newspaper the South China Morning Post (SCMP)
in 2016. The English-language SCMP is blocked in mainland China
and often runs articles that are more critical of the Chinese govern-
48 Paul Ducklin, “Lenovo ‘Superfish’ Controversy—What You Need to Know,” Naked

Security by Sophos, February 20, 2015; Jim Finkle, “U.S. Urges Removing Superfish Pro-
gram from Lenovo Laptops,” Reuters, February 20, 2015.
49
Henry T. Casey, “Lenovo Urges Windows 10 Users to Uninstall Dangerous Utility,”
Laptop, June 3, 2016; Jared Newman, “Lenovo’s Service Engine Marks Yet Another Bloat-
ware Blunder for the Company,” PCWorld, August 12, 2015.
50 Scott Cendrowski, “China’s WeChat Is a Censorship Juggernaut,” Fortune, April 14,
2017; Jordan Novet, “China’s WeChat Captures Almost 30% of the Country’s Mobile App
Usage: Meeker Report,” CNBC, May 31, 2017.
51 Dorinda Elliott, “Tencent: The Secretive, Chinese Tech Giant That Can Rival Facebook
and Amazon,” Fast Company, April 17, 2014.
ment than would be allowed by Chinese government censors. Accord-

ing to the New York Times, “Alibaba said the deal was fueled by a
desire to improve China’s image and offer an alternative to what it
calls the biased lens of Western news outlets,” reasoning that mirrors
language frequently used by the Chinese government regarding cover-
age of China.52 In July 2016, after the SCMP managed to interview a
detained Chinese activist when even her lawyer and husband could not
get in contact with her, the Guardian quoted a former SCMP employee
as criticizing the paper: “A newspaper that used to be one of the best
in Asia is now becoming a mouthpiece.”53 In the interview, the activist
claimed that she regretted her actions and wanted to repent, leading
many to believe that the interview was forced.
Chinese Business in Iran

A final concern is that Chinese companies investing or building infra-
structure in Israel also could be conducting business with Israel’s adver-
saries, which could be contrary to Israel’s interests.54 Although this also
might be true for companies from other countries with which Israel
does business, Chinese companies investing in Israel might be state-
owned, and the Chinese state has significant reach into even private
companies, which could make this a more salient issue for Chinese
investment. Of the 42 Chinese companies we examined, ZTE and
China Railway Tunnel Group are known to have business ties in Iran,
and ZTE has violated U.S. sanctions and sold surveillance equipment
to an Iranian government–controlled telecom company. ZTE sold
$130.6 million worth of network equipment to Telecommunication
Company of Iran (TCI) in 2010, including intercept equipment capa-
52
David Barboza, “Alibaba Buying South China Morning Post, Aiming to Influence
Media,” New York Times, December 11, 2015.
53
Tom Phillips, “Mysterious Confession Fuels Fears of Beijing’s Influence on Hong Kong’s
Top Newspaper,” The Guardian, July 25, 2016.
54 For more detail, see Scobell and Nader, 2016, Chapter 4.
ble of monitoring citizens’ voice, text messaging, and internet commu-

nications.55 This sale also included equipment that originated in the
United States. In March 2017, the U.S. government fined ZTE almost
$900 million for export control violations. The U.S. Department of
Justice’s press release on the settlement stated that
ZTE obtained U.S.-origin items—including controlled dual-use

goods on the Department of Commerce’s Commerce Control
List (CCL)—incorporated some of those items into ZTE equip-
ment and shipped the ZTE equipment and U.S.-origin items to
customers in Iran. ZTE engaged in this conduct knowing that
such shipments to Iran were illegal. ZTE further lied to fed-
eral investigators during the course of the investigation when it
insisted, through outside and in-house counsel, that the company
had stopped sending U.S.-origin items to Iran. In fact, while the
investigation was ongoing, ZTE resumed its business with Iran
and shipped millions of dollars’ worth of U.S. items there.56
The China Railway Tunnel Group also has conducted business

in Iran; its parent company, China Railway Group Limited, has a
contract of more than $2 billion to build a high-speed rail link from
Tehran to Qom and then to Isfahan.57 In May 2015, three months after
the launch of the Iran project, the China Railway Tunnel Group won
an $800 million contract to build a portion of the Tel Aviv light rail.58
55
Steve Stecklow, “Special Report: Chinese Firm Helps Iran Spy on Citizens,” Reuters,
March 22, 2012.
56 U.S. Department of Justice, “ZTE Corporation Agrees to Plead Guilty and Pay over
$430.4 Million for Violating U.S. Sanctions by Sending U.S.-Origin Items to Iran,” press
release, Office of Public Affairs, Washington, D.C., March 7, 2017.
57 “Iran Finalizes €2.2b Rail Deal with China’s CMC—Exclusive,” Financial Tribune,
May 20, 2017; “Iran Launches $2.7bn High-Speed Rail Project,” Trade Arabia, February 26,
2015.
58 Times of Israel Staff, “Chinese Company Connects Tel Aviv Rail, Tehran,” July 6, 2015.
Chinese Development of Major Infrastructure

Although some of the Chinese projects in Israel began the year prior to
China’s announcement of its BRI, Chinese construction and operation
of ports, rail, and roads in Israel can be viewed today through the lens
of the BRI, especially because the BRI builds on longer-term Chinese
efforts to push westward. In terms of ports, the maritime component
of the BRI, Chinese companies are working to develop port infrastruc-
ture across Asia, Africa, and the Middle East. Outside of Israel, such
ports include the Doraleh Port in Djibouti, the Gwadar Port in Paki-
stan, and the Colombo Port City in Sri Lanka.
The Doraleh Port was financed and built by Chinese state-owned
enterprises and is the site of China’s first overseas military base, which
became officially operational as of August 2017. The military facility
is located southwest of the main port, but there are reports that the
Chinese navy will have a dedicated berth in the port as well.59 Accord-
ing to one recent analysis, among the factors that China has consid-
ered in selecting the location for its first, and potentially future, over-
seas bases, is the existence of a Chinese-built and -operated port and
other transportation infrastructure. The authors of this analysis report
that researchers from China’s Naval Research Institute “recommend
building overseas military facilities in locations where Chinese state-
owned companies have already built—or are building—infrastructure
primarily for civilian use.”60 The United States also has a naval base in
the area, near the new Chinese facility, raising concerns about poten-
tial surveillance. Other concerns include the degree of leverage China
might have in Djibouti given the large amount of Chinese loans used
59 Erica Downs, Jeffrey Becker, and Patrick deGategno, “China’s Military Support Facility
in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base,” CNA,
July 2017.
60 Downs, Becker, and deGategno, 2017.
to finance various infrastructure projects in the country, amounting to

60 percent of Djibouti’s gross domestic product.61
The Gwadar Port in Pakistan, built by CHEC, has been leased
to another Chinese state-owned company for 23 years. Gwadar sits at
a strategic location between Asia and the Middle East at the mouth
of the Strait of Hormuz, on a route that accounts for 82 percent of
China’s crude oil imports.62 Some media reports have speculated that
the port will be the site for China’s next overseas military base.63 The
Colombo Port City project in Sri Lanka, another China-invested port
area, also has attracted attention because of potential corruption and
environmental issues, as well as its strategic benefit for China in the
Indian Ocean.64
Chinese state-owned companies also have been taking over cargo
terminals in ports across Europe, most recently Zeebrugge in Belgium,
and in Spain, Italy, and Greece.65 European leaders have become wor-
ried about Beijing’s use of its investments for political leverage. One
example is Greece, which, following a $1 billion Chinese investment
in the old Piraeus Port, has resisted European Union condemnations of
China’s human rights violations, blocked a statement against Chinese
aggression in the South China Sea, and objected to more-extensive
61
Andrew Jacobs and Jane Perlez, “U.S. Wary of Its New Neighbor in Djibouti: A Chinese
Naval Base,” New York Times, February 25, 2017.
62
Ankit Panda, “Chinese State Firm Takes Control of Strategically Vital Gwadar Port,” The
Diplomat, November 13, 2015.
63
Liu Zhen, “Pakistan Port on China’s Radar for Naval Base, Pentagon Report Says,” South
China Morning Post, June 7, 2017b.
64 SmrutiS. Pattanaik, “Controversy over Chinese Investment in Sri Lanka,” East Asia
Forum, June 5, 2015; Wade Shepard, “Sri Lanka’s Colombo Port City: The Frontline of
China and India’s Geopolitical Showdown,” Forbes, August 12, 2016.
65 Keith Johnson, “Why Is China Buying Up Europe’s Ports?” Foreign Policy, February 2,
2018. For a broader discussion of China’s port investments, see Devin Thorne and Ben Spe-
vack, Harbored Ambitions: How China’s Port Investments Are Strategically Reshaping the Indo-
Pacific, C4ADS, April 17, 2018.
scrutiny of Chinese investment in Europe.66 Without explicitly men-

tioning China, European Commission President Jean-Claude Juncker
said in September 2017,
Europe must always defend its strategic interests . . . . If a foreign,

state-owned company wants to purchase a European harbor, part
of our energy infrastructure or a defense technology firm, this
should only happen in transparency, with scrutiny and debate.
It is a political responsibility to know what is going on in our
own backyard so that we can protect our collective security if
needed.67
Israel also considers ports as key infrastructure that require spe-

cial protection.68 However, Chinese state-owned enterprises have
entered the Israeli market as sole or subcontractors or suppliers and
have won tenders to build and operate new ports (as well as other trans-
portation assets that are considered by Israel to be critical infrastruc-
ture, such as rail) without extensive scrutiny.69 In 2016, in an op-ed in
the U.S.-based international affairs magazine Diplomatic Courier, the
managing director of the Israeli Association of Public-Safety Commu-
nications Officials advocated for Israel’s participation in the BRI and
promoted Djibouti as a model for Israel in balancing relations with the
United States and China. Djibouti, he wrote, “has found the magic
66 JasonHorowitz and Liz Alderman, “Chastised by E.U., a Resentful Greece Embraces

China’s Cash and Interests,” New York Times, August 26, 2017.
67 European Commission, “State of the Union 2017—Trade Package: European Commis-
sion Proposes Framework for Screening of Foreign Direct Investments,” Brussels, Septem-
ber 14, 2017.
68 Roy Goldschmidt, “Hakiberneti Veha’Hagana Al Tashtiyot Chiyuniyot” [“Cyber Space
and Defense on Essential Infrastructure”], Haknesset [The Knesset], Merkaz Hamida
Veha’Mechkar [Center for Research and Information], May 12, 2013.
69
Amos Harel, “Israel Is Giving China the Keys to Its Largest Port—and the U.S. Navy
May Abandon Israel,” Haaretz, September 17, 2018.
formula that allows these rival super powers to dwell side by side.”70
However, the U.S. and Israeli military presence in Haifa presents con-
cerns regarding the operation of a container terminal at the neighbor-
ing civilian port by a Chinese company. Haifa is a frequent port of call
for the U.S. Sixth Fleet and serves as the base for Israel’s submarines.71
In 2018, for example, there were three port calls in Haifa, by the air-
craft carrier USS George H.W. Bush, the amphibious assault ship USS
Iwo Jima, and the guided-missile destroyer USS Donald Cook.72 The
state-owned Shanghai International Port Group (SIPG) won a 25-year
contract, beginning in 2021, to operate the new Bayport Terminal at
Haifa port next door to the government-owned naval port, as shown
in Figure 5.2.73
China portrays its port development activity as primarily eco-
nomic in nature, and many recipients also view relatively cost-effective
Chinese bids to build infrastructure as an economic opportunity,
which could lead political and security ramifications to be overlooked
and deals to be less thoroughly scrutinized. Some observers in Israel
have begun to note these potential effects on Israel’s security inter-
ests, particularly concerning the effect that Chinese involvement with
Israeli ports might have on the U.S. military’s willingness to operate
in these areas, although it is not clear whether they are differentiating
between Chinese control over an entire port versus Chinese operations
at a section of a port. Rear Admiral (Ret.) and professor Shaul Horev,
70 Roi Feder, “What China’s New Silk Road Means for Israel,” Diplomatic Courier, Septem-
ber 1, 2016.
71 Justin Jalil, “Israel Navy Welcomes New Submarine in Haifa,” Times of Israel, Septem-
ber 23, 2014; U.S. 6th Fleet, webpage, 2017.
72 “Chinese Port Operator at Haifa Will Mean Questions for U.S. Navy,” The Maritime
Executive, September 14, 2018.
73 Yu, 2015. “Shanghai Wins Haifa Terminal Concession,” Port Technology, April 13, 2016;
“Haifa Container Terminal Deal with China’s SIPG Under Review,” PortSEurope, Decem-
ber 23, 2018.
Figure 5.2
Aerial Image of the Haifa Port Area
Israeli Navy base

New port
area where
SIPG will
build and
operate the
Bayport
Terminal
Chemical
facility
Airport
SOURCE: Google Maps and consultations with Israeli experts.

NOTE: Locations are not exact.
the director of the University of Haifa’s Research Center for Maritime

Policy and Strategy, and former Deputy Chief of Naval Operations and
director of the Israel Atomic Energy Commission (IAEC), said that,
because of the Chinese involvement with the port in Haifa, the possi-
bility of the U.S. Sixth Fleet viewing Haifa as a home port is “no longer
on the agenda.” Horev also implied that former senior U.S. military
personnel believed “Israel lost its mind” in letting a Chinese company
operate the port, and now the Israeli Navy “will not be able to count on
maintaining the close relations it has had with the Sixth Fleet.”74 This
sentiment is shared by some U.S. naval officials. For example, Admiral
(Ret.) Gary Roughead, former U.S. Chief of Naval Operations, said
that a Chinese-run port in Haifa could limit U.S. Navy ships’ port
calls. In a workshop at the University of Haifa in August 2018, he
reportedly said that
74 Harel, 2018.
the Chinese port operators will be able to monitor closely U.S.

ship movements, be aware of maintenance activity and could have
access to equipment moving to and from repair sites and interact
freely with our crews over protracted periods. Significantly, the
information systems and new infrastructure integral to the ports
and the likelihood of information and electronic surveillance sys-
tems jeopardize U.S. information and cybersecurity.75
Former U.S. ambassador to Israel Dan Shapiro told the Times

of Israel that “To have a Chinese company operate a port of a close
ally potentially poses a significant challenge and maybe a risk for U.S.
Navy operations.”76
CHEC, the state-owned company building both the Gwadar and
Colombo projects, is developing Ashdod’s new port. As the aerial image
of the Ashdod port area in Figure 5.3 indicates, CHEC will operate in
close proximity to Israel’s navy base and to the national electricity com-
pany and the regional refineries, two other key infrastructure assets.
In addition to ports, Chinese companies are involved in other
major infrastructure projects in Israel, especially in transportation.
Israel is drawn to cost-effective Chinese bids, commitment to comple-
tion of projects under tight deadlines, and Chinese interest in financ-
ing parts of projects. In addition, Israel sees its connection with the
BRI as an opportunity to improve its ties with China more generally, as
well as to open economic opportunities for Israeli companies.77 Thus,
although the MOD limits all its tenders to Israeli suppliers or to foreign
suppliers with no connection to foreign governments, other ministries
75
David Brennan, “Chinese Deal to Take Over Key Israeli Port May Threaten U.S. Naval
Operations, Critics Say,” Newsweek, September 14, 2018; also reported in “Chinese Port
Operator at Haifa Will Mean Questions for U.S. Navy,” 2018.
76
Raphael Ahren, “Has Israel Made a Huge Mistake Letting a Chinese Firm Run Part of
Haifa Port?” Times of Israel, December 20, 2018.
77 Ben-Gedalyahu, 2015.
Figure 5.3
Aerial Image of the Ashdod Port Area
Where
Passage for Navy vessels
CHEC is Ashdod
developing Israel refineries
the Electrical
Ashdod Corporation
Port
Israeli Navy base
SOURCE: Google Maps and consultations with Israeli experts.

NOTE: Locations are not exact.
do not impose such restrictions. In some cases, sector-specific regula-

tors have been blocking Chinese bids to take over different assets—
for example, the insurance companies Clal and The Phoenix—fearing
that foreign companies would control hundreds of billions of shekels
of Israeli savings and pensions (or about 28 percent of that amount
in U.S. dollars).78 However, officials in the transportation and energy
sectors do not appear be concerned about the same considerations and
instead see value in the substantial cost savings and improved efficiency
offered by Chinese companies.79
The risks of Chinese state-owned entities building and running
major infrastructure in Israel have been flagged for years by Efraim
78 Melman, 2018. In 2017, the average exchange rate was 3.5755 Israeli shekels to the U.S.
dollar, so 100 billion worth of shekels would be the equivalent of $28 billion (Organisation
for Economic Co-operation and Development, 2018).
79Sonia Gorodisky, “Shuv Chevra Sinit Zachta Be’Michraz Tashtiyot Anak; Sakkana o
Hizdamnut?” [“Again a Chinese Company Won a Giant Infrastructure Tender; Danger or
Opportunity?”], Globes, March 4, 2018.
Halevy, former head of the Mossad, Israel’s intelligence agency.

Although Halevy does not oppose economic connections with China,
he fears that, given the close links between Chinese companies and the
PRC, Chinese control of key assets in Israel could be used as leverage
against Israel.80 In late 2013, he wrote that
It is clear that China is establishing varied transport systems

enabling it to increase its field of interest throughout the Middle
East, turning it into a major player, with broad strategic interests
in the area . . . . China holding the trans Israel railway, owning it
and operating it, will not be understood by the U.S.81
Halevy alluded to other political risks as well:
China gives substantial support, at times massive, to the extrem-

ists from among our enemies. Twenty-two years of diplomatic
experience have shown that China refused to respond to Israel’s
requests not to supply our enemies with means to further develop
of [sic] weapons of mass destruction . . . . China has shown that in
all related to the war on Islamic extremism terror, it is willing to
put up secure banking infrastructure for the use of terrorists who
are active against Israel.82
Similar risks were raised by Israeli political leaders. In March

2018, four Knesset members representing different parties across the
political spectrum initiated a discussion in the Knesset Foreign Affairs
80 Efraim Halevy, “Meoravut Sin Be’Kav Harakevet Le’Eilat: Haim Hi Retsuya Le’Medinat
Yisrael?” [“China’s Involvement in the Train Line to Eilat: Is It Desirable for the State of
Israel?”], Shasha Center for Strategic Studies, The Hebrew University in Jerusalem, 2014.
81 As reported in PTI, “Former Mossad Chief Efraim Halevy Warns Against China’s Role
in Israeli Rail,” The Economic Times, October 5, 2013.
82 As reported in PTI, 2013. Note that while other countries have experienced debt risks
from Chinese loans for BRI-related infrastructure, this has not been a concern for Israel,
where the debt-to–gross domestic product ratio is below 60 percent.
and Security Committee titled, “Israel’s Policy vis-à-vis the Entrance

of Chinese Entities to Strategic Areas in Israel,” which concentrated
on political and security risks.83 In July 2018, for the first time, a clas-
sified discussion was reportedly held at the Committee.84 Reportedly,
during the discussion, the prime minister’s economic adviser, Avi
Simhon, indicated that the government might form a new “body or
team that would vet foreign investments, a move largely seen [as] aimed
at China,” in stark contrast to the Israeli government’s current policy,
which has encouraged foreign investment from China. This suggestion
is seen as influenced by shifts in U.S. and European attitudes toward
Chinese investment.85
Since then, leading security experts in Israel have voiced concerns
over deepening Chinese involvement in Israel’s infrastructure and tech-
nology sectors, including Nadav Argaman, the head of Shin Bet, Isra-
el’s internal security service, who called for instituting a mechanism for
screening foreign investments in January 2019.86 Reportedly, mostly
in response to fears over U.S. pressure, the Israeli National Economic
Council and the National Security Council have been working on a
plan to vet foreign investments.87 However, as of January 2019, such a
plan had not been formalized. At the same time, a policy shift seems in
83 Melman, 2018.
84 Conversations with a former senior official with Israel’s Ministry of Labor, Tel Aviv, July
2018, and an Israeli think tank team, Tel Aviv, July 2018. Reference to the hearing also was
included in Barak Ravid, “Scoop: Netanyahu’s Senior Economic Adviser Backs Trump’s
Trade War with China,” Axios, July 12, 2018.
85
Hagai Amit, “In Turnaround, Israel May Form Body to Vet Foreign Investment,”
Haaretz, July 16, 2018.
86
“Chinese Investments in Israel Could Pose Security Threat, Shin Bet Chief Warns,”
Haaretz, January 9, 2019.
87 “Chinese Investments in Israel Could Pose Security Threat, Shin Bet Chief Warns,”
Haaretz, January 9, 2019; Hagai Amit, “Israel Moving Ahead with Law to Vet Foreign
Investment,” Haaretz, December 20, 2018.
the making, as Israel reportedly is planning to bar Chinese and Turk-

ish companies from competing in a tender process for establishment
of a new international airport because of Chinese espionage concerns
and diplomatic tensions with Turkey. Although China was not tar-
geted specifically, the tender was limited to companies from member
countries of the North Atlantic Treaty Organization.88
Israeli Companies
Israeli companies that receive Chinese investment might create security
vulnerabilities or concerns for either Israel or the United States. This
section briefly describes a subset of the Israeli companies, including
venture capital companies, that were the targets of Chinese investment.
We selected these companies based on one or more of three criteria:
(1) their development of potentially sensitive or dual-use technologies,
(2) the high-risk potential of the Chinese entity doing the investing,
and (3) concerns expressed by stakeholders or government officials.
Table 5.2 summarizes key information on the seven operating compa-
nies selected for analysis.
The sale of Tnuva—the largest Israeli food conglomerate and a
symbol of local industry—to Chinese Bright Food drew substantial
public criticism that generated debate on this deal within the Israeli gov-
ernment. Lawmakers proposed a bill to regulate foreign investments in
Israel more generally, implying, however, a focus on China especially.89
The Israeli government blocked the bill and the Ministry of Finance
backed the deal on the grounds that Chinese companies are not different
from any other economic players and that the Ministry of Finance would
88 Times of Israel Staff, “Israel Said to Bar China, Turkey from Bidding for $40 Million Air-
port Tender,” Times of Israel, January 25, 2019.
89 Evron, 2017.
Table 5.2
114
Israeli Companies That Received Chinese Investment

Chinese
Israeli Entity Company Information Investors Area of Concern
Tnuva Tnuva’s share of Israel’s dairy Bright Food Acquisition led to protests in Israel over food
market exceeded 70 percent (state-owned) security, as the deal gave a Chinese state-owned
at the time of acquisition company a 56-percent stake in one of Israel’s
(declined since then to about largest food producers; members of the Knesset
50 percent). a Economic Affairs Committee opposed the deal.b
ThetaRay Cybersecurity company that Alibaba ThetaRay’s products aim to detect and prevent
specializes in the detection cyber intrusions from Chinese government actors.
and prevention of advanced
persistent threats, which are
high-level cyber actors, usually
nation-states.c
Kaymera Cybersecurity start-up focused GoCapital Kaymera’s security products are marketed toward
on mobile devices.d governments as well as businesses; Kaymera’s
founders have military security backgrounds.d
Toga IT and telecommunications Huawei Potentially sensitive technologies; investment by

Networks company; the nature of Huawei, a company with suspected ties to the
Huawei’s relationship with Toga Chinese military and government.
is unclear.e
HexaTier Database security company; Huawei Potentially sensitive technologies; investment

according to Reuters, “Huawei by Huawei, a company with suspect ties to the
will use HexaTier to set up a Chinese military and government.
research and development
center in Israel for databases in
the cloud.”f
Chinese
Rainbow Investment company focused ZTE Investment by ZTE, a company with suspected ties
Medical on medical innovations, with to the Chinese military and government and that
a current portfolio of 12 has illegally conducted business in Iran.
companies.g
Copyleaks Company’s product uses AI to Unknown Copyleaks’ founders were formerly programmers
identify plagiarism in the 8200 unit in the IDF, which is responsible
for signals intelligence and is comparable to the
U.S. National Security Agency.h
a
Lazar Berman, “Chinese State Company Buys Controlling Stake in Tnuva,” Times of Israel, May 22, 2014; Adi Dovrat-

Meseritz, “Israel’s Biggest Food Company Sees Its Share of Market for Dairy Goods Fall Below 50%,” Haaretz,
October 9, 2017.
b
Berman, 2014.
c
David Penn, “ThetaRay Lands $5 Million Investment from Alibaba, Partners with PwC,” Finovate Blog, December 4,
2015.
d
Gedalyah Reback, “Kaymera Nabs $10 Million for Its Super Secure Mobile OS,” Geektime, February 1, 2016.
e
Hirschauge, 2016.
f
Tova Cohen and Catherine Cadell, “Huawei in Talks to Buy Israeli Cyber Company HexaTier: Sources,” Reuters,
December 20, 2016.
g
Rainbow Medical Innovation, homepage, undated.
h
“AI Plagiarism Detection Co Copyleaks Raises $1.1m,” Globes, March 29, 2018.
115
always guarantee that the Israeli consumer could purchase foodstuffs at

“reasonable prices” regardless of the identity of the buyer.90
Other than Tnuva, most of the Israeli companies present con-
cerns related to technology. Concerns about Chinese ownership of
Israeli technology companies can be broken down into issues related to
transfers of military technology, the security and privacy of customer
data, and concerns about IPR enforcement. Chinese investment in
companies working on semiconductors, AI, satellite communications,
and other potentially dual-use technologies falls into the first category,
even though the Israeli companies might not be working directly on
military applications. Investment in technology companies in the fields
of telecommunications and cybersecurity raises issues of security and
data privacy. Access to telecommunications platforms could be used
for surveillance, and customer data held by Chinese companies could
be subject to access requests from the Chinese government. Moreover,
China has a track record of weak enforcement of IPR, which could lead
to the theft of Israeli IP, and even to the possibility of Israel losing its
competitive advantage in the technology industry.
More generally, Chinese investments in Israel can lead to increased
social and political influence. This concern fueled the opposition to the
acquisition of Tnuva, which some in Israel view as a national symbol.
As mentioned earlier, there has been speculation regarding the con-
nection between Chinese investment in Greece and several pro-China
stances Greece then adopted in the European Union. Australia also
has started to reckon with widespread issues of Chinese political inter-
ference and influence operations. The CCP has employed a combina-
tion of carrots and sticks to manipulate members of the Australian
academic and business communities as well as politicians, including a
case where an Australian senator repeated Chinese government talk-
90 Navit Zomer, “Rosh HaMosad Lesha’avar: Shlita Zaar Be’neches Cmo Tnuva – Sakana”
[“Former Mossad Head: Foreign Control in an Asset like Tnuva—Danger”], Ynet, Febru-
ary 17, 2014.
ing points regarding the South China Sea after receiving donations
from a Chinese citizen and counselled this Chinese donor on avoiding
Australian government surveillance.91 Similar influence and coercion
approaches could be applied in the context of Israel.
Venture Capital
In addition to acquiring or directly investing in Israeli companies,
Chinese entities have been active in investing in Israeli venture capi-
tal firms (a subset of such firms is shown in Table 5.3). Many of these
venture capital companies focus on investing in other Israeli companies
innovating in areas of sensitive or potentially dual-use technology, such
as cybersecurity, AI, and robotics.
The Israeli private equity firm Catalyst is worth mentioning as an
addition to risks of Chinese ownership and access to Israeli dual-use
technology because it also raises conflict of interest concerns. Catalyst
head, former Israeli Air Force pilot and commander, Israel Aerospace
Industries chairman, and Yisrael Beitenu Minister Yair Shamir, also
serves as the chair of NTA, the national company responsible for rail
in Gush Dan, the central coastal part of Israel. NTA issued a tender
that was characterized as “problematic” and “flawed” by the Ministry
of Finance. Despite objections, Shamir announced that Chinese enti-
ties won after proposing the lowest bid. Two months later, Catalyst
launched the China Everbright Limited China Israel Fund in partner-
ship with the PRC-owned China Everbrite Fund.92
Chinese-Israeli venture capital fund MizMaa is also notable. It
is based in Israel and invests only in Israeli companies, although it is
funded by China. MizMaa’s funding comes from three wealthy Chi-
91 John Garnaut, “Australia’s China Reset,” The Monthly, August 2018.

92 Tali Heruti-Sever, “Yair Shamir Metsig: Ha’Malatim HaTsarfatiyim, Hakronot Has-
iniyim, Hayoets Hamefukpak, Ve’Nigudei Hainyanim” [“Yair Shamir Present: The French
UAVs, the Chinese Cars, the Shady Consultant, and the Conflicts of Interests”], The Marker,
January 30, 2017.
Table 5.3
118
Israeli Venture Capital Companies

Chinese
Singulariteam Venture capital fund that aims to “focus Tencent Potential for dual-use technology;
investments into new areas like machine Holdings, Singulariteam also raised funds from
learning, artificial intelligence and Renren an “unnamed Russian investor.”a
robotics”a
Viola Ventures Venture capital fund that invests in Baidu, Investments in potentially sensitive or
(formerly Carmel “Enterprise Software/SaaS, AI, Cloud Ping-an, dual-use technologies
Ventures) Infrastructure, FinTech, Frontier Qihoo, and
Technologies (automotive, IOT, AR/ Shengjing 360
VR, drones), Big Data, Digital Media,
Consumer Services, Semiconductors and
more”b
Canaan Partners Venture capital fund that invests in Lenovo, Investments in internet infrastructure
the following sectors: SaaS/Enterprise, Shengjing 360
mobile computing, and internet
infrastructurec
Catalyst Catalyst is a private equity firm that China Investments in potentially sensitive
(Catalyst China launched the first Israeli-Chinese fund Everbright or dual-use technologies; conflict of
Everbright with an investment of $200 million Ltd. interest: Catalyst head Yair Shamir
Limited China- from China Everbright Ltd. It invests in also is the chair of NTA, the Israeli
Israel Fund) technology and innovation companies, governmental company building
including SatixFyLtd, an Israeli provider the light rail in the Tel Aviv area.
of satellite communication.d Irregularities related to light rail
tenders have raised conflict of interest
concerns.
Chinese
OurCrowd Small venture capital firm; portfolio Unknown Investments in potentially dual-use
includes cyber threat intelligence or sensitive technologies; the identity
companies Thetaray and Kenna Security, of the Chinese investor is unknown,
AI companies Vayavision and Magisto, although an OurCrowd representative
and robotics company Memic, among claimed that the company received
others e funding in its C round from “China’s
most well-known internet company”f
Pitango One of Israel’s largest venture capital Yongjin Group Investments in potentially sensitive or
funds; has invested in 250 companies dual-use technologies.

worldwide; portfolio includes
semiconductor companies Anobit
and Sckipio, text analytics company
ClearForest, facial recognition protection
company D-ID, and cybersecurity
companies ForeScout and Skycure,
among many others g
119
120
Chinese

JVP Venture capital firm focusing on Alibaba, Investments in potentially sensitive or
cybersecurity (11 companies in its Yongjin Group dual-use technologies
portfolio), big data/predictive analytics
(eight companies), media/next-gen
tech (ten companies), and cloud and
enterprise software (ten companies)
a
Ingrid Lunden, “Israel VC Singulariteam Raises 2nd Fund, $102M Backed by Tencent, Renren Founders,” Techcrunch,
January 28, 2015.
b
Viola Ventures, homepage, undated.
c
Canaan, “About,” webpage, undated.
d
Heruti-Sever, 2017.
e
OurCrowd, “Funded Portfolio,” webpage, undated.
f
Feifei Zhang, “Cool Reflections on ‘Israel Fever’” [“以色列热”的冷思考], Economic Observer, October 22, 2016.
g
Pitango Venture Capital, “About Us,” webpage, undated.
nese families and invests in the following sectors: AI/machine learn-

ing, mobility (autonomous vehicles), cybersecurity, fintech/blockchain,
and cloud/storage/serverless computing.93 MizMaa has been operating
since 2016, and through late 2018 has participated in funding rounds
totaling over $80 million. According to one of MizMaa’s founders,
their goal is to invest at least $100 million in a portfolio of 16 to 18
companies, aiming for a 10-percent stake in each.94 MizMaa’s core
team includes a former employee of the U.S. Department of Defense
and current member of the Board of Trustees for the U.S. National
Defense University’s Institute for National Strategic Studies, as well
as an Israeli Air Force veteran who worked on the deployment of new
aviation technologies.95
Conclusion
Israel’s advanced technology sector attracts Chinese investment, while

its position along the BRI economic corridor has further increased
its attractiveness as a location for major Chinese-built infrastructure
projects. There are enormous benefits to Israel in its business relations
with China. Investment can help it diversify its sources of capital, and
links with Chinese businesspeople can help Israeli companies enter the
rapidly growing Chinese market. Collaboration on technology and
innovation can accelerate discoveries and technology improvements.
Involving Chinese construction companies can prove a lower-cost and
more-efficient source of project development and completion than
93 MizMaa, “Sectors,” webpage, undated.

94 Idan Rabi, “Chinese Fund MizMaa to Invest $100m in Israeli Startups,” Globes, June 13,
2017.
95 MizMaa, “Team,” webpage, undated.
could be gained from either Israeli or other foreign companies working

on those tasks.
At the same time, however, as Chinese investment and construc-
tion in Israel continue and potentially grow, Israel has become con-
cerned about the potential risks posed by this activity. Sources of poten-
tial risk include the military and government connections of Chinese
companies investing or building infrastructure in Israel, security vul-
nerabilities and censorship concerns presented by Chinese technology
companies, and companies conducting business with Israel’s adversar-
ies. Chinese investment and construction activity in Israel could lead
to transfers of military or dual-use technologies to China, threats to
Israeli IP and potentially to the competitive advantage of Israel’s tech
companies, and surveillance opportunities and threats to consumer
data privacy.
CHAPTER SIX
Policy Implications of Growing Israeli-Chinese

Ties
Relations between China and Israel are growing quickly and expanding
in numerous areas—diplomacy, trade, investment, construction, edu-
cational partnerships, and tourism. China’s prime objectives in Israel
are acquiring advanced technology and utilizing Israel’s location for the
BRI while maintaining a relatively low profile in the region, although
public engagements have become increasingly visible. The logic of the
first two goals is clear, but what about the logic underlying the third
goal? China wants to sustain a highly beneficial relationship with Israel
while continuing to enjoy good relations with countries in the Arab
and Muslim worlds. To be blunt, China does not want to be perceived
as being staunchly “pro-Israel” because this would almost certainly
undermine its cordial ties and vibrant economic relations with other
countries in the Middle East, including Iran. Understandably, Israel
seeks to expand its diplomatic, economic, and strategic ties with the
world’s fastest growing major economy and diversify its export markets
and sources of investments from the United States and Europe.1
Although evolving relations with China present Israel with impor-
tant opportunities—for instance, large pools of available capital and
cost-effective, fast construction of plant and infrastructure projects at
1 Poulin, 2014; and Liu Zhen, 2017a.
123
high standards—they also pose a variety of challenges. First, this coop-

eration represents an area where Israel’s interests might diverge from
those of the United States, Israel’s most important ally. In particular,
China’s engagement with the Israeli tech sector and Chinese involve-
ment in building and operating key infrastructure projects in Israel
could upset Washington, especially in light of growing trade tensions
between the United States and China.
Already, there are indications that reports on these deepen-
ing Israeli-Chinese ties are raising some eyebrows in Washington. In
November 2018, Haaretz reported that, according to one White House
official, “the Pentagon was also infuriated too, as were the Treasury
Department and the office of Vice President Mike Pence” about Israel’s
port collaboration with China, “but as far as is known, the issue is
not yet on Trump’s agenda. The official did warn, however, that when
Trump is personally briefed on the matter, he would be expected to
be furious.”2 On his visit to Israel in January 2019, National Security
Adviser John Bolton voiced Washington’s concerns over Beijing’s grow-
ing involvement in key infrastructure in Israel, according to reports,
and specifically mentioned the Haifa port terminal.3
A second challenge is incompatibility between some Chinese and
Israeli interests. China’s interests in the Middle East are motivated not
only by the region’s role as a link in the BRI, but also by China’s energy
dependence, which demands good relations with Israel’s adversaries,
primarily Iran. As a result, China’s political positions and objectives
in the region conflict with Israeli interests, and the two countries find
themselves on opposing sides in international forums, such as the UN.
As noted above, China prefers to have a relatively low-key rela-
tionship with Israel so that it can maintain cordial relations with other
2 Amir Tibon and Amos Harel, “‘Trump Will Be Furious’: Tension Between U.S. and
Israel over China Infrastructure Projects,” Haaretz, November 11, 2018.
3 Michael Wilner, “Bolton Tells Netanyahu of U.S. Concerns with Chinese Presence at
Haifa Port,” Jerusalem Post, January 6, 2019.
Policy Implications of Growing Israeli-Chinese Ties 125
Middle East states. Indeed, China wants to be able to portray itself as

a champion of the Palestinians and a good friend of the Arab world.
China desires a balanced Middle East policy to ensure the continued
flow of energy from the region and also wants to continue to reap eco-
nomic benefits with numerous Arab states. In addition, China wants
to raise its stature and influence in the Middle East and be seen as a
true great power.4 From Beijing’s perspective, all great powers in the
modern era have been prominent players in the Middle East.
A third challenge rests on the security of Israel’s technology and
future prospects for the Israeli economy. Based on the experiences of
other countries, China’s policies and practices on matters related to
IPR could raise red flags in Israel. According to Jason McNew, founder
of Stronghold Cyber Security, “China is notorious for not respecting
the intellectual-property laws of other nations so Israel has to be very
careful about what kind of manufacturing they outsource to China.”5
Furthermore, acquisition of Israeli companies and knowledge gener-
ated through academic cooperation might enable China to funnel
crucial technologies and resources from Israel to China, with insuf-
ficient returns. As mentioned earlier, Israeli companies face difficulties
penetrating the Chinese market. Through this process, China could
gradually become a direct competitor to Israel, depriving Israel of the
benefits of its past investments in advanced technologies and brand
development. Although the issue of returns on investment to a specific
company is a private matter about which Israeli companies might need
to become better informed, the overall strength of innovation in Israel
can be a matter of government concern. Accordingly, the government
will need to remain vigilant to the possibility of the erosion of its inno-

5 Dave Gordon, “Unlikely Partners? China and Israel Deepening Trade Ties,” BBC News,
July 19, 2018.
vation base, including strengthening IP protections and aggressively

pursuing violations if warranted.
Finally, China’s construction and operation of key infrastructure
projects in Israel, including ports and rail, raise political and security
concerns. In particular, Chinese installation of and access to cameras,
radio, fiber-optics, and cellular networks raise cybersecurity, data pri-
vacy, and espionage risks. Chinese involvement in major infrastructure
projects also raises economic questions related to the ability of the local
Israeli construction and transportation industry to survive, given the
competition with Chinese state enterprises with enormous access to
subsidized capital, as well the crowding out of other foreign (private)
companies that cannot compete with Chinese rates.6 Although open-
ing the market to Chinese firms was aimed at increasing competition,
there is now a fear of a Chinese “takeover.”7
Despite rapidly evolving relations with the PRC, Israeli under-
standing of modern China and its foreign policy is limited.8 Israeli
security and diplomacy experts have traditionally focused on the
Middle East, along with the United States and Europe. Business
experts mostly have been geared toward the United States and Europe.
In fact, aside from strong restrictions on the sales of defense technol-
ogy imposed by the MOD since the mid-2000s, Israel does not have
an overall China policy that addresses issues of IP, Chinese involve-
ment with Israeli infrastructure, and investment. The absence of such
a policy prompted the desire for a discussion in the Knesset Foreign
6 Telephone conversation with a former official at the Ministry of Economy, April 2018.
7 Telephone conversation with a former official at the Ministry of Finance, February 2018.
8 Telephone conversation with an expert on Israeli-Chinese ties, February 2018; conversa-
tion with an Israeli think tank team, September 2017; telephone conversation with a former
U.S. official with extensive experience in Israel-U.S. relations, August 2017.
Affairs and Security Committee on China’s involvement in strategic

infrastructure in Israel.9
Policy Recommendations
Israel is not the only country grappling with questions related to how
it manages its trade and investment ties with China. Approaches
are varied and include the U.S. model of carefully examining Chi-
nese investment and retaliating against China’s activities related to
IP and technology transfer, among other practices as well as more-
liberal approaches, such as those of the United Kingdom, Germany,
and France. Countries that limit China’s involvement in their econo-
mies usually focus on two core dimensions: investment and access to
technology and construction and operation of major infrastructure.
Although foreign investment in sensitive technology and involvement
in major infrastructure could be relevant to any foreign actor, Chinese
entities with deep ties to the PRC government and access to low-cost
capital present a unique set of challenges.
In the next section, we focus on policy recommendations for
Israel. These recommendations are primarily aimed at acquiring the
necessary knowledge and developing policies that would help Israel
gain the most out of its growing ties with China without compromis-
ing its security, undermining its competitive edge, and jeopardizing
its close ties with Washington. These recommendations fall under
two overarching categories: (1) gaining a better understanding of what
opportunities and challenges deeper ties with China could bring; and
(2) using the experiences of other countries to develop policies vis-à-
vis the PRC that account for these challenges and opportunities. We
include recommendations for U.S. policymakers in a later section dis-
9 Melman, 2018.
cussing the implications of the growing Israel-China ties for the United
States.
Develop a Better Understanding of China and the Implications of

Deeper Ties
As Israel develops a comprehensive policy toward China, it should
ensure that it fully understands the opportunities and challenges that
its growing ties entail. This understanding hinges on investing in more-
focused policy research and in developing the human capital that can
guide this thinking.
Consider a Formal Interministerial China Process to Coordinate
Policy
Israel’s ministries have different policies toward China. As noted
above, the MOD limits all its tenders to Israeli suppliers or foreign
suppliers with no connection to foreign governments, but other minis-
tries do not impose such restrictions and allow tenders from companies
in China. This might be a reasonable policy and is similar to that of
other countries. But the practices of non-defense ministries could have
implications for Israeli security and defense, so information-clearing is
important.
One way to coordinate information is to set up an interminis-
terial group that would meet regularly. This group could be formal
or informal and could include members of the cabinet or officials at
the director-general level. To ensure participation and to make sure
that important issues are properly addressed, it could be run out of the
office of the director-general of the Prime Minister’s Office. Whatever
option is chosen, given the importance and potential benefits and risks
of the China relationship, a coordination mechanism will be beneficial.
Assess the Costs and Benefits of Engagement with China
Israel should fully examine the potential opportunities and challenges
of its deepening ties with China. The analysis should go beyond the
issue of foreign investment and specifically examine the attributes and

interests of China, as well as its modes of operation, that could distin-
guish it from other countries with which Israel is engaging. Similarly,
this assessment should consider Israel’s own unique strategic position,
which could make the country particularly vulnerable to unchecked
ties with China or give Israel additional leverage. Table 6.1 lists exam-
ples of unique attributes that should be incorporated into Israeli think-
ing on its policy vis-à-vis China.
Clearly, more-extensive research is needed to examine these and
other issues that could affect the calculus for Israel’s deepening its ties
with the PRC. For that purpose, Israel should make China a more
salient topic in its security, economic, and diplomatic assessments.
Israel also should develop sufficient expertise to better understand the
full implications of the country’s relations with the PRC.
Develop China Expertise Within the Policy Community
Although Israel has been deepening its ties with China across the
board, the Israeli policy community’s understanding and knowledge of
modern China is thin.10 Based on our discussions with experts, there
are very few scholars in Israeli academic institutions with expertise on
contemporary China and even fewer with knowledge of Chinese for-
eign and economic policy, despite the fact that Asian Studies depart-
ments have existed in Israeli universities for decades. Mandarin lan-
guage skills are taught at insufficient levels at academic institutions.
China expertise in government ranks, as well as in think tanks, is also
limited.11
However, Israel does have untapped China expertise. Israeli
defense experts who were active during the era of deep defense col-

tion with an Israeli think tank team, September 2017.
tion with an Israeli think tank team, September 2017.
Table 6.1
130
Attributes for Consideration in a Cost-Benefit Analysis of Israel’s Ties with China

China-Specific Attributes Israel-Specific Attributes
Opportunities
Fastest growing major economy Seeks foreign investment; European investment uncertain
because of economic slowdown and political constraints
Rising diplomatic power Subject to BDS pressures and diplomatic challenges in
Europe and the United States. While China does not
support Israel, PRC officials refrain from criticizing its
politics.
Large potential export market Economy dependent on exports; interest in diversifying
export markets beyond Europe and the United States
The BRI will create shipping and trade links from Central Israel is drawn to Chinese cost-effectiveness and sees its
Asia to South Asia, the Middle East, and onward to Africa own strategic location along the BRI as an asset that can
and Europe. Chinese companies are often the lowest help improve ties with Beijing.
bidders in infrastructure tenders, committed to tight
deadlines, and willing to fund portions of projects.
China needs to move up the technology ladder to sustain Israel is a source of innovative technology that can help
its growth and escape the so-called “middle-income China in many sectors.
trap.”a
Challenges
Problematic track record of cyber espionage and lack of The success of the Israeli economy hinges on its high-tech
respect for IPR sector and any risk to its competitiveness could have dire
implications for continued growth.
China-Specific Attributes Israel-Specific Attributes
Energy dependence on Iran (and Saudi Arabia) dictates Iran is Israel’s main adversary with a decades-long proxy
strategic position in the Middle East war between them. Israel is threatened by Iran directly
and through its proxies in Syria, Lebanon, and Gaza. Israel
works to prevent Iran from strengthening its position in
the region, continuing to develop ballistic missiles and
nuclear capabilities, and arming Hezbollah and Hamas.
In a trade war with the United States; conflicting security Israel depends on the United States militarily (for
agendas in the South China Sea weapons and financial aid); diplomatically (for political
cover at the UN and international forums); and
Policy Implications of Growing Israeli-Chinese Ties

economically (for example, Israeli companies list on the
U.S. NASDAQ exchange and likely will continue to do so
even if China becomes Israel’s number one trade partner).
Israel’s enhanced ties with China, especially technology
cooperation, could upset Washington and endanger
Israeli-U.S. ties.
Chinese construction and operation of key infrastructure Israel’s small size and contested regional environment
pose unique cybersecurity and data surveillance risks. require special protection of critical infrastructure.
Investments and operation of critical infrastructure by Israel could be pressured politically, as it was in the terror
Chinese entities connected with the PRC government financing court case in New York against the Bank of
could be used as political-strategic levers. China. Also, the operation of infrastructure that could
have security links or risks (e.g., ports that are used by the
U.S. Navy) could draw criticism from the United States and
trigger a renewed confrontation with Washington over
the nature of Israel’s ties with the PRC.
a
George Magnus, Red Flags: Why Xi’s China is in Jeopardy, Yale University Press, 2018.
131
laboration between the countries as well as private-sector actors who

engage with Chinese counterparts regularly in some cases have signifi-
cant knowledge of Chinese politics and foreign policy.12
Israel is not the only country to be caught off guard in terms of
its shortage of modern China expertise. But one positive example is
how the United States prioritized its development of policy experts on
China in the late 1970s. U.S. interests vis-à-vis China are very differ-
ent than Israel’s, and, as a result, the U.S. sense of urgency for grap-
pling with China was much greater. However, at the time the United
States started developing its expertise, relations were limited and few
could foresee the rapid growth and 21st-century importance of China.
Instead, at the time U.S.-China relations were established, the U.S. for-
eign policy focus was largely on Europe and the Soviet Union, much as
Israel’s focus has been on the Middle East.
Israel can learn valuable lessons for ensuring that its critical insti-
tutions—the IDF, Mossad, Shin-Bet, cabinet ministries (e.g., Foreign
Affairs, Defense, Strategic Affairs, Energy, Transportation), cyber
command, and business associations—are all equipped with expertise
and knowledge of the PRC. When needed, their expert staff members
should be available to advise other institutions dealing with China on
what the benefits and shortcomings could be.
Concrete ideas for enhancing Israeli understanding of China
include expanding Mandarin training programs; expanding contem-
porary China studies and research in Israel’s universities; encouraging
and offering funding for master’s and doctoral students to focus on
contemporary China, and, in particular, on its foreign and economic
policy; launching academic dialogues on the topic of the PRC and
facilitating exchange programs for faculty and students specializing in
this topic; and inviting experts from the United States and abroad to
train the Israeli policy community. Israel also could take advantage of
12 Telephone conversation with an expert on Israeli-Chinese ties, September 2018.

defense experts who gained their knowledge during the early period of
defense collaboration and of the businesspeople working with and in
China. Connecting such informal experts to Israel’s policy commu-
nity could help bridge contemporary gaps in understanding and build
expertise.
Develop a Comprehensive Policy Toward the PRC, Learning from

Other Countries
As it works to build a cadre of China expertise and examines the costs
and benefits of engaging the PRC, Israel should develop policies that
reflect this calculus. Fortunately, Israel can learn from the experiences
of other countries and adapt some of the common approaches to China
to Israel’s unique settings. Although the United States is Israel’s most
important strategic ally, the two countries have very different interests
and challenges when it comes to the PRC. In many instances, Israel
might not want to adopt a U.S. approach toward China and Chinese
companies. At the same time, the U.S. experience offers valuable les-
sons for Israel, especially when it comes to screening foreign investment.
Israel is now facing a situation similar to that of Europe in grap-
pling with how best to handle the trade-offs associated with Chinese
investments. Chinese economic activities in Europe include acquisi-
tions of technology and investment (and even the provision of funding)
in major infrastructure projects. As in the Israeli case, many Chinese
investments in Europe are made by Chinese state-owned enterprises.
But Europe has started to become wary of Chinese investment: Chi-
nese investments in European technology have raised concerns that
the PRC could leverage European knowledge to become a direct com-
petitor to countries on the continent.13 After the $5 billion acquisition
13 Philippe Le Corre, “On Chinese Investment and Influence in Europe,” testimony before
the House of Representatives Foreign Affairs Committee, May 23, 2018.
of German robotics firm KUKA in 2016, European leaders also have

become worried about the transfer of technologies to the PRC.14
Chinese investment in European infrastructure also is reminis-
cent of the Israeli case and includes the transportation, energy, real
estate, and ports sectors.15 The ports usually are linked to inland logis-
tics networks, meaning that Chinese involvement in Europe, and
soon in Israel, would extend beyond the ports themselves. Similar to
the Israeli responses to the Bright Food acquisition of Tnuva, Chi-
nese investments in European infrastructure have occasionally led to
domestic public resistance.16
In its commercial assessment of the PRC, Europe has flagged sev-
eral important issues that also are relevant for Israel: the lack of recip-
rocal access to the Chinese market; a level playing field; and fair com-
petition.17 Europe also is concerned about human rights, which is not
an explicit Israeli concern. However, Israel is extremely worried about
the empowerment of Iran, one of China’s allies, and that should be
reflected in Israeli assessments and policymaking on ties with China.
In addition to learning from the U.S. experience, Israel can ben-
efit from following these discussions in Europe. Israel should priori-
tize the development of its PRC policies on three central policy areas:
screening of foreign investment; regulating foreign involvement in
major infrastructure projects; and monitoring companies suspected of
cyber espionage and irregular technology transfer. As noted in Chapter
Two, Israel already has a mechanism for controlling exports of defense
and dual-use items; in addition to our policy recommendations, it will
14
Andrea Shalal, “Germany Risks Losing Key Technology in Chinese Takeovers: Spy
Chief,” Reuters, April 11, 2018.
15 Le Corre, 2018.
16 David Shamah, “MKs, Farmers, Slam ‘Dangerous’ Sale of Tnuva to Chinese,” Times of
Israel, February 26, 2014a; Le Corre, 2018.
17 European Commission, 2017.
need to maintain the quality of that process to respond to new develop-

ments in technology and defense.
Consider Developing a Mechanism to Screen Foreign Investment
Different countries have different approaches to foreign investment.
The key consideration in the United States is whether investments
could pose a risk to U.S. national security. For Israel, this standard
would encompass not only the direct effects on Israeli national secu-
rity, but also the implications of the investment for Israeli-U.S. ties
because Israel depends on the United States for its security. There
are other models beyond the U.S. model. However, many countries
are considering restrictions to Chinese investment.18
The U.S. mechanism is CFIUS, an interagency panel of govern-
ment officials that reviews acquisitions of U.S. businesses by foreign
buyers to assess security risks. Led by the Treasury secretary, it includes
a broad membership.19 For many years, CFIUS relied strictly on vol-
untary disclosures from business entities or other government agen-
cies to review or investigate deals in question. Although filings were
voluntary, CFIUS retained the right in perpetuity to unwind a deal it
had not reviewed, so filing provided safe harbor. In addition, CFIUS
reviewed acquisitions only and did not review other ways in which
foreign companies might become involved in U.S. businesses, such as
18 Jodi Xu Klein, “It’s Not Just the U.S.: Around the World, Doors Are Shutting on Chinese
Investment,” South China Morning Post, September 15, 2018.
19 In addition to the Secretary of the Treasury, members include the heads of the Depart-
ments of State, Defense, Justice, Commerce, Energy, and Homeland Security; the Office
of the U.S. Trade Representative; the Office of Science and Technology Policy; and, on an
ex officio basis with specific responsibilities, the Director of National Intelligence and the
Secretary of Labor. Observers (who may participate) include the heads of the Office of Man-
agement and Budget, the Council of Economic Advisers, the NSC, the National Economic
Council, and the Homeland Security Council (U.S. Department of the Treasury, “Composi-
tion of CFIUS,” webpage, December 1, 2010).
through passive investments or licensing agreements. It also did not

review greenfield investments by foreign firms.
The United States instituted a major reform of CFIUS and export
control laws in 2018, the first reform of CFIUS since 2007. Under the
new rules, CFIUS reviews now cover some purchases of real estate as
well as concessions at airports, seaports, and military bases; reviews
were extended to transactions beyond acquisitions if they involve cer-
tain types of infrastructure, technology, or personal data.20 Other
changes include extending CFIUS jurisdiction to transactions that
are meant to evade CFIUS jurisdiction and requiring mandatory fil-
ings for certain transactions. Greenfield investments—and, in fact, the
majority of foreign investments into the United States—still do not
fall within CFIUS jurisdiction. There were no China-specific measures
in the changes, but some of the changes could fall heavily on Chinese
investment activity. Not making investment, infrastructure, or any
other type of screening country-specific is one way of ensuring open
markets while instituting the preferred security policy.
The European Union does not have a CFIUS-like mechanism,
but it has been working to define a joint position regarding Chinese
foreign direct investment and a Europe-wide review. However, con-
flicting interests among European Union member states could hinder
the development and enforcement of a Europe-wide policy. Although
France and Germany support the idea, several member states fear that
it would lay the groundwork for protectionism.21 With that said, some
legislation is expected that will highlight the importance of this issue
and empower individual states that have adopted national screening
20 This paragraph draws from Brian Egan, Evan T. Abrams, and Zhu (Judy) Wang,
“Changes Afoot for CFIUS and U.S. Export Controls as the Dust Settles on FIRRMA [the
Foreign Investment and Risk Review Modernization Act], International Law Advisory, Step-
toe, August 16, 2018.
21 Philip Blenkinsop, “EU Promises Tough Line on U.S., China While Pushing for Free
Trade,” Reuters, June 23, 2017.
policies.22 Most recently, Germany amended the German Foreign

Trade Regulation to enable the government to screen and, if needed,
block foreign investments.23
Additional models exist. In contrast to the United States, which
focuses on national security, both Canada and Australia review for-
eign investments with broader mandate. Australia’s Foreign Investment
Review Board includes seven members and acts in an advisory role to
Australia’s treasurer, who makes the final decisions. The Board reviews
investments based on a “national interest” test.24 In Canada, under the
Investment Canada Act, foreign investors who either acquire a Cana-
dian business or set up a new business must notify the government and
could be subject to review. Both the law and its associated rules are
complex, but one important point is that investments above a certain
threshold are assessed for their likely net benefit for Canada.25
Israel should consider the CFIUS model, along with other possi-
ble mechanisms for screening foreign investment. Israeli policymakers
have traditionally opposed this idea, explaining that the Israeli busi-
ness environment is bureaucratic enough and poses sufficient hurdles
to business activity.26 Yet, given the flow of foreign funds into Israel,
this idea is worth reconsidering with adaptations.
Whichever model is decided, it should strive to not crowd out
foreign investment and not merely add another layer to an already
22 Erik Brattberg, “China’s Relations with U.S. Allies and Partners in Europe,” testimony
before the U.S.-China Economic and Security Review Commission, April 5, 2018.
23 “Foreign Investment in the EU: A Tale of Competing Tensions,” Lexology, July 26, 2017.
24 Foreign Investment Review Board (Australia), “About FIRB,” webpage, undated; Foreign
Investment Review Board (Australia), Annual Report 2016–17, Commonwealth of Australia,
2018.
25 Government of Canada, “Investment Canada Act,” webpage, April 6, 2018; Government
of Canada, Annual Report: Investment Canada Act 2016-17, Innovation, Science and Eco-
nomic Development, 2017.
26 Telephone conversation with an expert on Israeli-Chinese ties, February 2018.
bureaucratic business environment. Israel also should be as transparent

as possible, fast, and agile. At the same time, screening should ensure
that the deals in question meet Israel’s desired criteria. These crite-
ria could include whether they pose national security risks to Israel
(e.g., accounting for surveillance risks; considering connections to
Israeli adversaries; or degrading the U.S.-Israel security relationship
by transferring know-how of dual-use technology, either directly or
indirectly). Criteria also could include whether investments undermine
Israel’s competitive edge in a critical industry, although this could start
to restrain the functioning of investment markets in an undesirable
way. Notably, anything involving economic—rather than security—
issues could result in adverse protectionism or political favors, so Israeli
policymakers should consider any non-security criteria carefully. Like
CFIUS, such a body should be an interagency institution that consults
with experts and stakeholders from different areas. Cases deemed risky
could move to a more comprehensive review or be placed under specific
restrictions.
As mentioned earlier, regulators in specific industries in Israel
have blocked Chinese purchases of what they deemed critical assets,
like the two biggest Israeli insurance firms, but there is no orderly
process that guarantees scrutiny and intervention if needed across the
board. This is where a mechanism modeled after elements of CFIUS
could become useful. Reportedly, for the first time in July 2018, the
prime minister’s economic adviser, Avi Simhon, indicated that the
government might form a new “body or team that would vet foreign
investment.”27 Since then, mostly in response to fears over U.S. pres-
sure, Israeli press reported that, in addition to the National Economic
Council, the National Security Council also has been working on
27 Amit, 2018.
a plan to vet foreign investments.28 Reportedly, in March 2019, the

Israeli government decided to announce the establishment of a com-
mittee to screen foreign investments, but the nature of this mechanism
and its effectiveness have yet to be established, and there are fears that
it would not be comprehensive enough to mitigate all risks.29 Accord-
ing to press, in response to objections from various ministries oppos-
ing additional bureaucratic burden, the screening mechanism might be
only voluntary.30
Consider Regulating Foreign Involvement in Critical Infrastructure
There are many definitions of critical infrastructure, but Israel, like
other countries, considers infrastructure critical when disrupting its
operation could have serious social, economic, political, and security
implications. Under the Israeli category, rail, ports, and other assets
require special protection.31 A CFIUS-like or other mechanism could
screen foreign involvement in critical infrastructure. This mechanism
need not be country-specific, but in the context of China, such screen-
ing would determine whether the entity involved is linked with the
PRC government, and if so, whether there are implications of a foreign
government’s access to Israeli critical infrastructure. This assessment
also should assess links of foreign entities to Israeli adversaries (such as
28 “Chinese Investments in Israel Could Pose Security Threat, Shin Bet Chief Warns,”
Haaretz, January 9; 2019; Hagai Amit, “Israel Moving Ahead with Law to Vet Foreign
Investment,” Haaretz, December 20, 2018.
29 Hagai Amit, “Netanyahu Rotse Le’Vaser Le’Trump al Hakamat Vaada Le’Hagbalat Has-
kaot Siniyot” [“Netanyahu Wants to Tell Trump About the Establishment of a Committee
to Limit Chinese Investments”], Marker, March 5, 2019; phone conversation with former
official with Israeli Ministry of Labor, March 6, 2019; phone conversation with U.S. State
Department official, March 6, 2019.
30
Omri Milman, “Ha’Malal Ba’Derech Le’Pshara: Haskaot Zarot Lo Yehuyvu Be’Bdikat
Vaada Meyuhedet” [“The NSC on the Way to Compromise: Foreign Investments Would
Not Require Examination Through Special Committee”], Calcalist Tech, March 13, 2019.
31 Goldschmidt, 2013.
Iran), and whether the deal could raise surveillance risks and compro-
mise the security of private data. At the same time, it is important that
foreign companies continue to operate and invest in infrastructure in
Israel. Because different sectors operate under different constraints and
have distinct objectives, it is unrealistic to expect that the Ministry of
Transportation, for example, will be aware of all risks stemming from
a foreign entity building and supplying cars for a light rail. In addi-
tion, it is counterproductive to the Israeli economy for the Ministry
of Transportation to be as restrictive as the MOD. To ensure that all
considerations are weighed accordingly, an interagency group is needed
for examining such deals.
Israel, however, might not want to block deals by foreign entities
that raise certain risks, but rather might develop mitigation strategies.
These could include, for example, requirements that any Chinese firm
investing in Israel accept certain restrictions and oversight if it also does
business with foreign governments hostile to Israel; that the investment
be structured in such a way that information or control over certain
activities be walled off from a foreign government; that a foreign entity
collaborate with an Israeli partner, and, in extreme cases, a requirement
that the Israeli partner be the prime contractor; and that appropriate
cyber protection is installed to protect against foreign espionage and
abuse of private data.
Ensure Monitoring Activities of Companies with Negative Espionage
Track Records
Israel should take steps to safeguard itself against companies that might
present risk of espionage. Again, these steps need not be country
specific. As noted in Chapter Five, the Chinese telecommunications
company Huawei presents a challenge, and its treatment illustrates dif-
ferent approaches Israel could take. The United States, for example, has
been quite cautious, banning the use of Huawei technology in the gov-
ernment and in 5G networks, along with Australia and New Zealand.
An intermediate approach is that of the United Kingdom, which

recognizes that telecommunication networks incorporate foreign tech-
nologies, that many manufacturers build some equipment in China,
and that there might be advantages to such multinational sourcing.
At the same time, the United Kingdom considers telecommunication
networks to constitute critical infrastructure and thus has developed a
strategy to mitigate the risks associated with the presence of Huawei in
the country’s networks. In 2010, following a set of agreements between
the UK government and Huawei, the latter formed the Huawei Cyber
Security Evaluation Center (HCSEC). HCSEC provides the UK gov-
ernment with a way to inspect Huawei’s equipment and insight into the
company’s strategies and product ranges, with the aim of mitigating
risks to UK national security. The governmental agency coordinating
with HCSEC is the UK’s Government Communications Headquar-
ters (GCHQ), which is similar to the U.S. National Security Agency
(NSA). The HCSEC is monitored by an oversight board, the role of
which is to report to the government that risks are addressed properly.
Although HCSEC is funded by Huawei, GCHQ oversees its commit-
ment to adhere to UK requirements and provides assurances regarding
security risks.32
Israel should consider a broad array of options when it comes to
technology security. Israel could limit the use of technology from a
specific provider on IDF bases and in sensitive government facilities, a
limitation that does not exist today. It also could require the sharing of
source code and local data storage, among other measures. Or it could
institute broad bans. One first step should be to conduct an in-depth
review of the variety of approaches adopted by different countries for
mitigating risk to understand which ones offer useful lessons.
32 Huawei Cyber Security Evaluation Center (HCSEC) Oversight Board, 1st Annual Report
2015: A Report to the National Security Advisor of the United Kingdom, March 2015.
Implications of Israel-China Relations for the United

States
The United States has a clear interest in China’s growing economic

and political presence in Israel. From the U.S. perspective, the poten-
tial for the PRC to acquire Israeli technology with advanced military
applications or convert critical infrastructure investments into strategic
assets—including the potential for dual-use of such assets as ports—
could pose challenges to U.S. interests, especially as U.S.-China com-
petition intensifies. Thus, although the Israeli MOD is exercising cau-
tion with respect to exports of dual-use technology to China, Chinese
investments in Israeli technology and critical infrastructure have pro-
ceeded largely without oversight, and could raise frictions between
the United States and Israel, similar to the way the PHALCON and
HARPY incidents did in the early 2000s.
In addition, Chinese influence over official Israeli diplomatic
positions would be problematic from a U.S. perspective. As shown in
the New York terrorism financing trial against the Bank of China,
the PRC has already demonstrated its ability to exert political pressure
on Israel and pit Jerusalem against Washington on an issue of great
importance.
Finally, Israel’s cooperation with China on facilitating BRI routes
to Europe also might raise concerns in the United States, although
this does not rise to the level of the other concerns. The U.S. National
Security Strategy stated that “China is gaining a strategic foothold in
Europe” and called for joint action with Europe to “contest China’s
unfair trade and economic practices and restrict its acquisition of sen-
sitive technologies.”33 These concerns in terms of PRC involvement
in Europe stem from its ability to influence certain European Union
members and its undermining of European unity on such matters as
the South China Sea, human rights violations, and better investment
33 White House, 2017.

screening to monitor risks related to dual-use technology and infra-

structure. In addition, the PRC’s presence in the Balkans has implica-
tions for ties with other regional actors, such as Turkey and Russia.34
The United States and Israel have distinctively different interests
and concerns vis-à-vis the PRC and there is no reason to expect that
they would see completely eye-to-eye on this topic. Still, transparency,
coordination, and awareness would help the United States obtain a full
picture of Chinese engagement in Israel and avoid friction between
Washington and Jerusalem. Thus, recommendations in this section are
designed for the United States, in addition to Israel.
Enhance U.S.-Israel Dialogue on China

The United States and Israel already have an established coordina-
tion mechanism on China, but it is handled by the Israeli MOD and
is limited to exports of dual-use technology. Coordination should be
expanded to other areas, aside from defense, and involve other min-
istries and agencies. The engagements between Washington and
Jerusalem should include China as a regular item in discussions and
policy decisions. Israel and the United States also should ensure regu-
lar information-sharing and joint monitoring of the nature and extent
of Chinese investments and economic activities in Israel and in the
broader Middle East (including in the Red Sea and east Mediterra-
nean). This is especially important as growing voices in Israel call for
developing a process to scrutinize Chinese economic practices more
closely.
Share Knowledge and Help Israel Develop Its China Policy

The United States, more than any other Israeli ally or partner, has
extensive knowledge and experience handling the PRC. As Israel deep-
ens its ties with China, the United States can play an important role in
34 Le Corre, 2018.
raising awareness and sharing information about the consequences and

long-term costs and benefits of Chinese economic involvement.
Israeli expertise and capacity on China is rather limited. To help
build this capacity, the United States can share its own experience in
terms of building its capacity of modern China understanding four
decades ago. In 1977, the top China and Asia staffer on the NSC staff,
Michel (Mike) Oksenberg, wrote a memo to his supervisor, National
Security Adviser Zbigniew Brzezinski, expressing concern that the gov-
ernment’s China experts lacked adequate knowledge and expertise of
China.35 The memo called for having 25 to 35 “top-flight Chinese
intelligence analysts,” and although this number was not reached in
full, several seasoned China experts indeed worked for the U.S. govern-
ment starting in the 1990s.36 The United States can share with Israel
how it developed adequate knowledge of China and expertise in a rela-
tively short period. That would provide an opportunity for the United
States to help build relevant Israeli capacity on China and provide
insight as Jerusalem crafts a comprehensive policy vis-à-vis the PRC.
In addition, the United States can advise Israel on developing an
investment screening mechanism and help Israel build greater capacity
regarding the regulation and oversight of defense-related sales, man-
aged in the United States by the Department of State, and export con-
trol of dual-use items, managed in the United States by the Depart-
ment of Commerce.
35
Mike Oksenberg, “Suggestion for a PRM,” memorandum for Zbigniew Brzezinski,
Washington, D.C., National Security Council, February 2, 1977.
36 Peter Mattis, “Getting China Right from Carter to Obama,” War on the Rocks, August 22,
2016.
Concluding Thoughts
Israel has an enormous amount to gain from contact and cooperation

with China. Better trade relations can help diversify Israel’s exports
and therefore provide more resilience to Israel’s economy, especially
because China is expected to grow far more quickly than Israel’s other
major export markets, Europe and the United States. Chinese tour-
ism, a form of services trade, can provide added benefit. There also are
investment benefits. China is a growing source of worldwide invest-
ment, and investment in Israel can help spur growth and business for-
mation. China also is improving its innovation and technology devel-
opment abilities, and Israeli leadership in this area can provide further
gains to both countries.
Despite the potential gains of the relationship to Israel, there are
also risks. The biggest is that the United States, Israel’s main security
patron, views China not only as a trade partner, but also as a global
competitor and a potential adversary. Accordingly, the United States is
likely to oppose any Israeli actions that build Chinese military capabili-
ties or transfer sensitive U.S. technology.37 Yet the very fact that China
is involved with some of Israel’s most advanced technology companies
means that there is a chance that Israel-China cooperation could lead
to building Chinese capabilities.
This is no reason for Israel to exit or shy away from the relation-
ship. According to reports from the Israeli TV Channel 13, Chinese
officials, including those from the Chinese Foreign Ministry, have
been seeking clarification from Israel regarding statements caution-
ing against warming ties with China.38 Although Israel should first
37 Telephone conversation with a former U.S. official with extensive experience in Israel-
U.S. relations, August 2017; in-person conversation with a former U.S. official who worked
on defense issues related to Israel in the late 1990s and early 2000s, August 2017.
38 Times of Israel Staff, “China Said to Seek Clarifications from Israel over Investment Con-
cerns,” Times of Israel, January 23, 2019.
and foremost not jeopardize its special relations with the United States,
it should ensure that it does not damage its important interests with
China. The United States is sympathetic to Israel seeking economic
gains from China—most strong U.S. allies are doing so. But it is a
reason for Israel to be more careful and aware about the relationship.
This includes more monitoring and coordination within the govern-
ment; better assessments of China’s economic activities; and building
capabilities among Israelis to speak Mandarin Chinese and gain exper-
tise in Chinese history, politics, economics, and strategic goals.
APPENDIX A
Data Collection and Methods
The authors drew on a wide range of data sources and employed a

mix of methods. We based the historical overview of Israeli-Chinese
ties largely on open-source materials in Hebrew, Chinese, and English
(Chapter Two). To better understand how China sees Israel, we relied
on Chinese sources, both official and media reporting (Chapter Three).
In Chapter Four, to measure Israel-China relations across differ-
ent domains, we compiled information from a variety of sources. For
political relations, we reported bilateral visits between China on one
side and Iran, Israel, and Saudi Arabia on the other. To do so, we relied
primarily on official Chinese-language information sources, includ-
ing the websites of the Chinese Ministry of Foreign Affairs, various
Chinese diplomatic missions, and the Chinese Ministry of National
Defense. We supplemented this with official Chinese news sources,
such as Xinhua, CCTV (now known abroad as China Global Televi-
sion Network, or CGTN), and the website of the People’s Daily. We
also included English news sources, such as Al Arabiya, Reuters, and
the New York Times. We examined China’s voting record at the UN
Security Council, particularly on resolutions critical of Israel from
1992 to 2016, the year of the most recent resolution.
In assessing bilateral defense relations, we used two measures of
arms transfers. The first relied on data from the SIPRI Arms Transfer
Database, which measures such transfers globally in a common unit the
147
institute calls the TIV.1 The second measure relied on Chinese media
reporting on Israeli arms transfers to and other forms of defense coop-
eration with India, the Philippines, Taiwan, and Vietnam, drawing on
the People’s Daily, the Global Times, and the news website of the Chi-
nese Ministry of Defense, 81.cn (also known as “China Military Net”).
Although the SIPRI data provide one of the most comprehensive sets
of information, the data have serious shortcomings. These shortcom-
ings include recording an arms transfer only if SIPRI has verified reli-
able information that a recipient has placed an order or if the seller has
begun delivery. Furthermore, the data cover only major conventional
weapons.2 The data do not cover other aspects of China’s defense rela-
tionships with other countries and entities in the region, including, for
example, China’s support for Iran’s nuclear program; military nuclear
cooperation with such countries as Algeria, Syria, and Iraq; the supply
1 These data provide the value of arms transfers from China to Iran and Saudi Arabia and
from Israel to China, India, the Philippines, Taiwan, and Vietnam.
2 SIPRI provides a detailed explanation of how it measures arms transfers:
SIPRI statistical data on arms transfers relates to actual deliveries of major conventional
weapons. To permit comparison between the data on such deliveries of different weap-
ons and to identify general trends, SIPRI has developed a unique system to measure the
volume of international transfers of major conventional weapons using a common unit,
the trend-indicator value (TIV).
The TIV is based on the known unit production costs of a core set of weapons and is
intended to represent the transfer of military resources rather than the financial value
of the transfer. Weapons for which a production cost is not known are compared with
core weapons based on: size and performance characteristics (weight, speed, range and
payload); type of electronics, loading or unloading arrangements, engine, tracks or
wheels, armament and materials; and the year in which the weapon was produced. A
weapon that has been in service in another armed force is given a value [of] 40 per-
cent of that of a new weapon. A used weapon that has been significantly refurbished or
modified by the supplier before delivery is given a value of 66 percent of that of a new
weapon . . . . (SIPRI, “Sources and Methods,” webpage, undated[b]).
Data Collection and Methods 149
of missiles and non-conventional weapons to Iran; and the indirect

supply of weapons to such groups as Hamas.3
In addition to arms transfers, we investigated the evolution of
defense relations from 1992 to 2016 using high-level defense exchanges,
such as visits by senior military personnel, and joint exercises between
China and the three countries. We also include references to such
exchanges with other major countries in the Middle East where rel-
evant, such as Egypt, Qatar, Syria, and Turkey.
For economic relations, we considered patents and trade. For data
on patents, we used the databases of the World Intellectual Property
Organization.4 For trade, we draw data from two sources. The first
is the United Nations Commodity Trade Statistics Database (UN
Comtrade), run by the United Nations Statistics Division, which gets
its data from national statistical authorities, and which provides data
from 1994 to 2015 on Chinese exports to and imports from Israel.5
The second source is the CSYD, which is published annually by the
National Bureau of Statistics of China, itself directly subordinate to
the State Council.6 CSYD and UN Comtrade data with China as the
reporting country are nearly identical—which is not unexpected, as
UN Comtrade gets its data from national statistical authorities. We
further compared CSYD and UN Comtrade data on Chinese exports
to Israel with UN Comtrade data on Israeli imports from China as
reported by Israel, as well CSYD and UN Comtrade data on Chinese
3 Shichor, 2006; Shapir, 2009.

4 World Intellectual Property Organization, 2017; We opted not to use bilateral foreign
direct investment (FDI) data. The United Nations Conference on Trade and Development
(UNCTAD), the primary source for such data, covers only 2001 to 2012. Given rapidly
developing investment relations, we decided that using those data would give an insuffi-
ciently complete picture of how economic ties between the two countries have evolved over
time. Instead, we use other sources for our discussion of investment in Chapter Five.
5 UN Comtrade, undated(b).
6 National Bureau of Statistics of China, undated.
imports from Israel with Comtrade data on Israeli exports to China

as reported by Israel. These data series diverge. We provide a more
detailed discussion of the discrepancies between China-origin data and
Israel-origin data in Appendix B.
We use several sources to gauge the strength of educational ties
between China and Israel, including the number of Confucius Insti-
tutes in Israel; the number of Israeli students in China and of Chinese
students in Israel; the number of academic programs and campuses
that Israel and China have in the other country; and the number of
senior academic exchanges and visits that have taken place between the
two countries.7
In Chapter Five, we investigate Chinese investment in Israel using
open source materials in English, Chinese, and Hebrew, including
publicly available but privately assembled data sets on investment and
construction; the Chinese and English websites of the Chinese com-
panies; the websites of the Israeli companies; U.S., Israeli, Chinese,
and other international news articles; technology and financial web-
sites that report on investments; blogs that report on cybersecurity or
human rights issues; and U.S. government reports.
Drawing on these sources, we looked at Chinese companies that
have invested in or been involved in infrastructure construction proj-
ects in Israel, as well as the Israeli entities that received the investment.
Although the list might not be exhaustive, we sought to examine as
many Chinese companies as possible that are known to have invested
in Israeli businesses or venture capital firms, or to have been contracted
for infrastructure projects in Israel between 2007 and 2018. The
7 For gauging the education relationship, data for Confucius Institutes are available via the
Confucius Institute Headquarters website; data on Israeli students in China and Chinese
students in Israel are drawn from the UIS and are supplemented by various news websites;
data for academic programs and campuses are available from various news websites, includ-
ing Reuters and the Times of Israel; and data for senior academic exchanges are drawn from a
wide variety of sources, including the websites of universities, the Chinese Embassy in Israel,
and others.
Data Collection and Methods 151
number of investments and infrastructure projects totaled 92, and 42

Chinese companies participated in these activities. In researching these
Chinese companies, we aimed to characterize their general investment
profiles, as well as connections to the Chinese government or defense
establishment, business dealings with Israeli adversaries, and any nega-
tive attention received with regard to security or privacy issues. We
identified 11 companies that raise potential concerns for Israel or the
United States.
We also assessed a subset of the Israeli companies that received
investment, with a focus on those that work on potentially sensitive
or dual-use technology, meaning technology with applications to both
the civilian and military markets, or those that received investment
from the Chinese firms we judged to be most likely to pose security
concerns to Israeli or U.S. interests. This analysis examined 11 of the
nearly 80 Israeli companies that were the targets of Chinese investment
from 2007 to 2018. We examined both direct investments as well as
investments through venture capital, and we included infrastructure
contracts where a Chinese entity is involved in any capacity, whether as
the prime contractor or as a subcontractor.
APPENDIX B
Differences in Trade Data by Source
Although all data sources show that trade between Israel and China
has grown, there is a notable discrepancy between data on Chinese
exports to Israel and Israeli imports from China, as well as between
data on Chinese imports from Israel and Israeli exports to China. The
CSYD data and UN Comtrade data on Chinese exports to Israel are
on average 1.2 times larger than UN Comtrade data on Israeli imports
from China. Similarly, CSYD and UN Comtrade data on Chinese
imports from Israel are on average 1.3 times larger than UN Comtrade
data on Israeli exports to China. Thus, both CSYD and UN Comtrade
note Chinese exports to Israel as having grown 61 times from 1994
to 2015, while UN Comtrade notes that Israeli imports from China
have grown 72 times over the same period. CSYD and UN Comtrade
also note that Chinese imports from Israel have grown 26 times from
1994 to 2015, while Comtrade notes that Israeli imports to China have
grown 55 times during the same period.
Several reasons can be provided to explain the differences in
the value of trade recorded by the Chinese and Israeli governments
and subsequently provided to UN Comtrade. The United States and
China, which face a similar issue in their trade relationship, established
the U.S.-China Joint Commission on Commerce and Trade (JCCT)
in 1983 as “a forum for high-level dialogue on bilateral trade issues
153
between the United States and China.”1 The JCCT, in turn, estab-
lished trade statistics working groups to ascertain the causes behind
the discrepancies between the two countries’ trade data. In 1994, the
working group’s main conclusion was that
goods shipped indirectly from China via Hong Kong and other
intermediary countries or regions account for a large part of the
discrepancy in the U.S.-China bilateral trade statistics. Although
both countries follow the same international guidelines on mer-
chandise trade statistics programs, the corresponding import and
export statistics from both countries will not necessarily match.
Differences in partner country attribution and value added in
intermediary countries or regions are major causes of the discrep-
ancies in indirect trade from China to the United States.2
In 2009, the statistical working group further found that statis-

tical discrepancies in eastbound (China to the United States) trade
“may occur when goods enter the commerce of [an] intermediary
country or region.”3 The working group also found that “differences
in values declared to customs account for a large part of the statisti-
cal discrepancy in direct trade” because goods exported from China—
particularly processed goods—“may change ownership in route to
the United States” with the “higher values reported for the goods in
U.S. imports reflect[ing] markups and not any transformation of the
products.”4 In 2012, the statistical working group found that statistical
discrepancies might arise from differences in definitions and meth-
1 “U.S.-China Joint Commission on Commerce and Trade (JCCT),” Export.gov, July 16,

2016.
2 U.S.-China Joint Commission on Commerce and Trade, Report on the Statistical Discrep-
ancy of Merchandise Trade Between the United States and China, October 2009, p. 1.
3 U.S.-China Joint Commission on Commerce and Trade, 2009, p. 2.
4 U.S.-China Joint Commission on Commerce and Trade, 2009, p. 3.
Differences in Trade Data by Source 155
odology, such as differing interpretations of what to include in each

other’s statistical territory, time lag, and Chinese re-exports. Statistical
discrepancies can also arise in eastbound direct trade “when an inter-
mediary party purchases the goods after export and resells them to a
third party in the United States at a higher price.”5 Finally, discrepan-
cies might occur in indirect trade when Chinese goods are shipped
through Hong Kong or other intermediary countries or regions because
of value added or the Chinese goods being declared as exports to these
intermediaries.6 Although Israel and China have not established any
similar statistical working groups to look into the statistical discrepan-
cies in their trade, it is likely that they have the same underlying causes.
Notable discrepancies also exist in Hong Kong and Israeli trade
data (see Figures B.1 and B.2). When considering China’s interna-
tional economic relations, it is valuable to consider Hong Kong as well,
because Hong Kong has served as a trade and investment conduit for
China. UN Comtrade–listed data on Hong Kong exports to Israel are
on average 1.04 times larger than UN Comtrade–listed data on Israeli
imports from Hong Kong. Data on Hong Kong imports from Israel
are on average 0.64 times larger than data on Israeli exports to Hong
Kong.
5 U.S.-China Joint Commission on Commerce and Trade, The Second Phase Report on the
Statistical Discrepancy of Merchandise Trade Between the United States and China, Decem-
ber 2012, p. 4.
6 U.S.-China Joint Commission on Commerce and Trade, 2012, pp. 3–5.
Figure B.1
Hong Kong Exports to Israel, 1991–2016
3,000
COMTRADE Hong Kong exports to Israel
Hong Kong exports to Israel,
2,500 COMTRADE Israel imports from Hong Kong
2,000
$U.S. million
1,500
1,000
500
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: UN Comtrade, undated(b).
Differences in Trade Data by Source 157
Figure B.2
Hong Kong Imports from Israel, 1991–2016
7,000
COMTRADE Hong Kong imports from Israel
Hong Kong imports from Israel,
6,000 COMTRADE Israel exports to Hong Kong
5,000
$U.S. million
4,000
3,000
2,000
1,000
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Year
SOURCE: UN Comtrade, undated(b).
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About the Authors
Shira Efron is a policy researcher at the RAND Corporation and a

special adviser on Israel with RAND’s Center for Middle East Public
Policy. She is leading RAND’s new Israel program and researches issues
related to Israel, the Middle East, food security, and technology adop-
tion in developing countries.
Howard J. Shatz is a senior economist at the RAND Corporation.

He specializes in international economics and economics and national
security. His RAND research has included such topics as the finances
and management of the Islamic State and its predecessors; civil ser-
vice reform, development policies, labor markets, and statistical sys-
tems in the Kurdistan Region of Iraq; and the Chinese economy and
technology-based development in China.
Arthur Chan was recently a research analyst at the RAND Corpora-

tion. His recent research includes such topics as China in the develop-
ing world and deterrence of interstate aggression.
Emily Haskel was recently an assistant policy researcher at the RAND

Corporation and a doctoral fellow at the Pardee RAND Graduate
School. Her research interests include U.S.-China relations, East Asian
security issues, cybersecurity, and international development.
195
Lyle J. Morris is a senior policy analyst at the RAND Corporation,

where he focuses on security developments in East and Southeast Asia.
He has more than ten years of experience researching and leading proj-
ects on Asia-Pacific security issues and has published recently on the
rise of coast guards in East and Southeast Asia, gray zone disputes, mar-
itime security in the Asia-Pacific, and Chinese military modernization.
Andrew Scobell is a senior political scientist at the RAND Corpora-

tion. His recent research includes China’s strategy toward the Middle
East, national security policymaking in China, and China’s relation-
ship with North Korea.
Since the early 2000s, relations between China and Israel have expanded
rapidly in numerous areas, including diplomacy, trade, investment, construction,
educational partnerships, scientific cooperation, and tourism. China’s primary
interests in Israel are advanced technology and Israel’s location as part of the Belt
and Road Initiative. Israel seeks to expand its diplomatic and economic ties with
the world’s fastest growing major economy and diversify its export markets and
investments from the United States and Europe. Although evolving relations with
China present Israel with important opportunities, they also present a variety of
challenges. In this report, RAND researchers discuss the growing relationship and
the challenges it poses for Israel and for Israel’s most important ally, the United
States. The report concludes with two recommendations for Israel and one for
the United States. Israel would benefit by (1) gaining a better understanding of
the opportunities and challenges deeper ties with China could bring, including
developing better knowledge of China; and (2) using the experience of other
countries to develop policies toward China that account for these challenges
and opportunities. The United States, in turn, would benefit by working more
closely with Israel to deconflict, shape, and advance a mutually agreed-upon
China-related agenda and by helping Israel build its knowledge base and
understanding of China.
C O R P O R AT I O N
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The Evolving Israel-

Library of Congress Cataloging-in-Publication Data is available for this publication.

Published by the RAND Corporation, Santa Monica, Calif.

Cover: Photo by esfera via Shutterstock.

Limited Print and Electronic Distribution Rights

The RAND Corporation is a research organization that develops solutions to public

This report examines the nature of Israel-China relations with

The RAND Corporation is a research organization that develops solu-

A Model for High-Tech Innovation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

4.1. High-Level Chinese Visits Under Each Chinese Leader,

3.1. Chinese Public Opinion of Israel’s Influence, 2006–2017. . . . . . 45

The Development of Israel-China Ties

Israel-China relations began in 1979 when businessman Saul Eisenberg

means of addressing China’s needs in military and domestic security

The Nature of Israel-China Ties

These mutual interests have resulted in a growing relationship across

have grown from only $38.7 million in 1992 to more than $3 billion

area of nanotechnology; a joint laboratory building for the University

Concerns Raised by the Relationship

As long as the defense relationship remains limited, the main concerns

nology and intellectual property issues, and construction projects. This

ments give rise to potential political concerns over these companies’

Israel, as demonstrated in 2013 when the Chinese government condi-

Implications and Policy Recommendations

Despite rapidly evolving relations with China, Israeli understand-

issues. A coordination mechanism also would help the government

as Israel is reportedly planning to bar Chinese and Turkish companies

Moving the Israel-China Relationship Forward

Although Israel might need to take a more reserved approach toward

2 Gregory Noddin Poulin, “Sino-Israeli Economic Ties Blossoming,” The Diplomat,

in bilateral trade in 2017.4 In 2014, Israel imported more goods from

Challenges Associated with Israeli-Chinese Ties

2000s. In the wake of agreeing to abort such defense connections with

11 Conversation with a senior official at Israel’s Ministry of Foreign Affairs, Jerusalem,

ance companies, have been blocked by Israeli regulators who fear

18 “‘Made in China 2025’ Plan Unveiled,” Xinhua, May 19, 2015.

Data and Methods

We used a mixed-methods approach throughout the research effort.

on academic exchanges. To examine Chinese investment and activity

The Plan for This Report

The remainder of this report proceeds as follows. Chapter Two reviews

History of Israel-China Relations

The Early Years: The Path to Normalization

Israel was one of only several nonsocialist countries to first recognize

through armed resistance and provided various Palestinian factions

Nonetheless, since 1979, and more so since the mid-1980s, senior

essentially removed its preconditions of solving the Palestinian ques-

Defense Technology Transfers Were the Bedrock of Ties

One of the key catalysts for Israeli-Chinese relations came in 1979,

14 Quoted in Shichor, 1994, p. 202.

tural experts, including a governmental official.21 Still, notwithstand-

21 Katz and Bohbot, 2017.

Israel’s significant error with the PHALCON was to lobby Con-

These incidents highlight the influence of the United States in

The Shift from Defense Cooperation to Economic

Although defense relations were severed after the HARPY incident

38 Poulin, 2014; Liu Zhen, 2017a.

Palestinian Islamic Jihad. Netanyahu agreed.39 Israeli Ambassador to

of all nonsensitive aspects of Israeli-Chinese cooperation.42 The Reso-

As subsequent chapters will show, the shift to economic cooperation

42 Prime Minister’s Office, “Tochnit le’kidum ve’harchavat ha’ksharim ha’kalkaliyim bein

and defense technology exports. However, the MOD has resisted.46 As

ture, including infrastructure that might be integral to Israeli securi-

Chinese Perceptions of and Interests in Israel

have grown from only $38.7 million in 1992 to more than $3 billion

18 “‘Made in China 2025’ Plan Unveiled,” Xinhua, May 19, 2015.

14 Quoted in Shichor, 1994, p. 202.

及其治理], Journal of International Security Studies [国际安全研究], Vol. 2, 2017.

23 “Iran’s Navy Commander Visits China,” China Military, October 21, 2014.

43 “China to Continue Escort Missions in Gulf of Aden, Somalia,” Xinhua, October 27,